AN  ADDRESS 


TO  THE 


COIUMSIAN  INSTITUTE, 

ON 

A MONEYED  SYSTEM, 


The  energy  which  is  to  carry  forward  the  intellect  of  3 people  belongs  chiefly  to  private 
individuals  who  devote  themselves  to  lonely  thought,  who  worship  truth,  who  originate 
the  views  demanded  by  their  age,  who  help  us  to  throw  off  the  yoke  of  established  pre- 
judices, who  improvejon  old  modes  of  education,  or  invent  better.  It  is  true  that  great  men 
at  the  head  of  affairs,  may,  and  often  do,  contribute  much  to  the  growth  of  a nation’s  mind. 
But  it  too  often  happens  that  their  station  obstructs  rather  than  aids  their  usefulness.  Their 
connexion  with  a party,  and  the  habit  of  viewing  subjects  with  reference  to  personal  aggraur 
dizement,  too  often  obscure  the  noblest  intellects,  and  convert  into  patrons  of  narrow  views 
and  temporally  interests,  those,  who,  in  other  conditions,  would  have  been  the  lights  of  their 
age,  and  the  propagators  of  everlasting  truth.”— Dr.  Charming. 


By  THOMAS  LAW. 


WASHINGTON  : 

JPMNTBD  BY  GA1E*  & SEATIN', 


1828. 


M ISo. 


PREFACE. 


To  the  President  and  Directors  of  the  Columbian  Institute . 

Gentlemen  : Having  considered  that  my  address  to  you, 
in  1826,  though  flattered  hy  your  order  for  publication,  could 
have  but  a very  limited  circulation,  and  having  subsequently 
witnessed  circumstances  in  corroboration  of  my  arguments 
in  favor  of  a National  Currency,  I have  for  some  time  medi- 
tated a re-publication  of  that  address  with  additional  facts ; but 
having  experienced  so  much  sickness  during  last  Autumn  and 
Winter  that  my  nervous  system  was  oppressed  by  the  heats 
of  Summer,  I resolved  to  visit  the  Virginia  Springs,  with  the 
hopes  of  acquiring  sufficient  health  to  resume  the  important 
subject. 

Though  only  partially  recovered,  I take  up  the  pen,  lest  I 
should  leave  undone  what  humanity  and  duty  urge  me  to  per- 
from. 

On  my  arrival  at  Charlottesville,  near  Monticello,  and  the 
University  established  by  Mr.  Jefferson,  I found  an  assemblage 
of  the  most  enlightened,  patriotic,  renowned  statesmen,  viz:  Mr. 
Madison,  Mr.  Monroe,  Judge  Marshall,  and  Judge  Brook,  who 
had  been  summoned  from  every  section  by  the  voice  of  their  State, 
to  consider  about  the  most  feasible  mode  to  make  improvements 
in  the  Ancient  Dominion  : After  a luminous  statement  of  its  geo- 
graphical advantages,  and  of  its  several  rivers  which  might  be 
rendered  useful,  alas!  the  termination  was  most  distressing,  by 
an  acknowledgment  of  a deplorable  want  of  ways  and  means, 
and  of  the  necessity  to  borrow  from  abroad. 

A desire  to  relieve  their  pecuniary  embarrassment  was  an 
additional  stimulus  to  exertion,  and  I could  not  refrain  when 
I considered  that  my  reasoning  was  not  ohly  applicable  to  every 
State  in  the  Union,  but  to  every  Nation. 


IV 


PREFACE. 


An  able  author  has  judiciously  observed,  that  every  political 
edifice,  however  brilliant  and  vast,  must  necessarily  be  frail, 
tottering,  and  temporary,  unless  rising  from  the  solid  basis  of 
a good  financial  system,  without  which  nothing  nationally 
great  or  good  can  either  be  attempted  or  achieved. 

After  expatiating  upon  the  advantages  of  ample  resources, 
for  civil  and  military  establishments,  the  same  author  says  : 
“ It  is  not  enough  that  Government  bestows  on  the  people  nega- 
tive blessings  ; that  it  be  valuable  principally  by  reason  of  the 
evils  from  which  it  exempts  them,  one  of  its  chief  duties  is  to 
create  and  keep  alive  a national  spirit,  a duty  of  magnitude, 
and  the  more  important,  as  local  interests  have  so  strong  a 
tendency  to  overbear  those  of  the  Union.  A People  is  a mere 
herd  of  men,  a sorry  aggregate  of  individuals,  unless  animated, 
by  a common  soul,  unless  cemented  together  and  dignified  by 
national  feeling — but  to  the  very  existence  of  these  national 
objects  are  requisite.  Those  who  collect  materials  for  the  an- 
nals of  the  country  should  always  have  to  record  a succession 
of  noble  achievements,  either  of  peace  or  war.  The  individual 
self  love  should  never  want  an  opportunity  of  identifying  itself 
with  national  honor.” 

Mr.  Burke  uses  the  following  emphatic  language,  in  speak- 
ing of  finance: 

“ The  revenue  of  the  State  is  the  State ; in  effect,  all  depends 
upon  it,  whether  for  support  or  for  reformation  ; as  all  great 
qualities  of  the  mind  which  operate  in  public  and  are  not  merely 
suffering  and  passive,  require  force  for  their  display,  I had  al- 
most said  for  their  unequivocal  existence.  The  revenue,  which 
is  the  spring  of  all,  becomes,  in  its  administration,  the  sphere 
of  every  active  virtue:  public  virtue  being  of  a nature  magni- 
ficent and  splendid,  instituted  for  great  things,  and  conversant 
about  great  concerns,  requires  abundant  scope  and  room,  and 
cannot  spread  and  grow  under  confinement,  and  in  circumstan- 
ces narrow  and  sordid.  Through  the  revenue  alone,  the  body 
politic  can  act  in  its  true  genius  and  character ; and  therefore  it 
will  display  just  as  much  of  its  collective  virtue  as  it  is  pos- 
sessed of  a just  revenue.” 


PREFACE. 


T 


It  has  been  justly  said,  that  enthusiasm  is  necessary  in  a cha- 
racter to  make  it  useful ; I will  not,  therefore,  apologize  for  ad- 
ding a few  more  arguments  in  favor  of  a national  currency.  It 
is  a general  complaint,  by  workmen  in  America,  that  they  can- 
not get  paid;  and  that  they  are  often  obliged  to  accept  drafts  on 
stores,  or  to  receive  things  in  barter,  by  which  they  are  losers. 

Litigation  is  occasioned  by  scarcity  of  money.  All  foreign- 
ers express  surprise  at  the  number  of  law  suits  in  the  United 
States.  If  money  could  be  obtained  at  five  per  cent,  very  few 
would  incur  the  trouble  and  expense  of  legal  proceedings,  and 
pay  legal  interest  of  6 per  cent,  merely  for  delay. 

Were  the  loss  of  useful  labor  estimated,  by  plaintiffs,  de- 
fendants, and  witnesses  attending  courts  in  the  United  States, 
it  would  amount  to  millions.  It  is  painful  to  think  how  dis- 
tress makes  many  persons  legally  dishonest.  Even  overt  acts 
of  robbery  are  increasing.  Poverty,  but  not  the  will,  occasions 
crime.  Any  one  who  should  examine  the  court  dockets  would 
be  shocked  at  the  number  of  suits. 

The  state  of  the  national  finances  is  rarely  considered  in  Con- 
gress. Constitutional  questions  only  arouse  the  orator,  such  as 
war,  or  the  treaty-making  power,  or  State  rights,  and  similar 
topics,  which  afford  opportunities  for  eloquence.  The  gorgeous 
decorations  of  the  Capitol,  and  the  extravagance  of  the  Govern- 
ment, are  also  themes  for  declamation  ; but  financial  subjects 
are  unheeded.  Even  the  present  misery,  so  general,  is  disre- 
garded. When  a man  speaks  of  millions  which  might  have 
been  saved,  and  of  calamities  which  might  have  been  averted, 
his  discourse  offends ; and  when  he  unfolds  accumulating  dis- 
tresses, he  is  termed  a chimerist  or  a croaker. 

After  a journey  of  200  miles,  on  my  way  to  Louisburgh,  I 
saw  a woollen  carding  machine,  being  the  first  on  my  long 
journey.  In  the  mountains,  there  is  an  abundance  of 
sheep,  and  waterfalls  for  mills,  to  turn  machinery,  and  also 
plenty  of  wood  for  steam  engines;  but  money  is  wanting  to  build 
factories,  and  to  set  up  machinery,  and  to  pay  hands.  The  peo- 
ple make  coarse  homespun,  but  still  those  who  are  able  to  pur- 
chase foreign  cloth  prefer  it,  as  it  is  neater  to  the  view,  and 


VI 


PREFACE. 


distinguishes  the  gentleman  from  the  laborer.  Suppose  a manu- 
facturing company  were  formed,  and  they  were  to  apply  to 
Congress  for  a loan  of  national  currency,  at  3 per  cent,  inter- 
est, the  men  and  women  now  employed  in  making  homespun 
might  almost  all  be  spared  for  agriculture  and  other  occupa- 
tions, and  the  consumption  of  foreign  cloth  would  be  saved. 
The  domestic  cloth  would  also  be  much  cheaper,  because 
the  expenses  of  a voyage  from  Europe,  and  the  duties,  and  the 
cost  of  land  carriage  of  above  200  miles,  would  be  saved,  and 
the  interest  and  profit  which  must  be  paid  to  the  merchant  on 
the  sums  he  advances  for  freight,  insurance  duties,  and  charges 
of  merchandise.  Wherever  I travel,  I find  the  want  of  money 
the  great  obstacle  to  the  setting  up  of  manufactures,  and  to  all 
kinds  of  improvements.  Under  the  colonial  system,  formerly, 
agriculture  and  commerce  were  only  adverted  to,  but,  since  our 
independence,  machinery  has  become  of  importance  next  to  ag- 
riculture, and  takes  the  precedence  of  commerce.  Napoleon, 
by  giving  300  monasteries  to  manufacturers,  has  caused 
more  prosperity  to  France  than  all  his  armies  and  navies 
could  effect.  They  silently  undermine  foreign  manufactures  ; 
and  we  now  perceive  Manchester  complaining  of  being  under- 
sold. When  I read  in  Las  Casas’  Memoirs  from  St.  Helena, 
©f  this  expanded  policy  of  Napoleon,  I considered  the  probable 
consequence  of  it.  I traced  the  cotton  from  America  to  Liver- 
pool and  thence,  to  Manchester,  from  whence  it  returns,  in  a 
manufactured  state,  to  Liverpool,  where  the  goods  must  be 
shipped,  and  pay  duties  before  they  can  be  admitted  into  the 
continent.  I then  traced  cotton  from  America  to  Havre  de 
Grace,  and  thence,  up  the  Seine,  to  Rouen,  &c.  where  factories 
are  now  establishing.  And  I could  not  refuse  the  painful 
conclusion,  that  the  expenses  on  the  former  route  are  much 
heavier  than  on  the  latter.  The  following  lines  will  illustrate 
my  reasoning. 


PREFACE. 


VII 


America*  Liverpool.  Manchester. 

A B 


A. 

X 


The  other  line  is  b.  Havre. 


C.  Seine 
-X 

Interior. 


Thus  Great  Britain  has  twice  as  many  shiftings  of  a cargo 
as  France. 

Labor  is  cheaper  in  France,  but  Great  Britain  has  an  ad- 
vantage in  the  greatness  of  capitals,  so  that  the  cotton  received 
in  a factory  goes  out  wove,  stamped,  and  finished;  whereas,  in  fo- 
reign factories,  dying,  &c.  are  separate  businesses,  and  great 
expenses  and  losses  are  incurred  in  removals.  The  interest  of 
money,  also,  is  lower  in  Great  Britain.  Thus,  as  Baron 
Storch  observes,  a manufacturer  who  borrows  at  4 per  cent, 
can  afford  to  employ  a third  more  capital  than  he  who  borrows 
at  6 per  cent. 

The  roads  through  the  passes  of  the  Virginia  mountains  are 
very  good,  and  the  bridges  also ; they  were  made  by  the  State, 
but  do  not  pay  much  more  than  the  annual  repairs.  Were 
manufactories  established,  towns  would  spring  up  at  proper 
distances,  and  the  tolls  of  the  roads  and  bridges  would  increase. 

We  read  of  10,000  and  20,000  houses  built  in  one  year  in 
London.  The  canal  now  making,  and  which  will  join  th 
Washington  canal,  which  runs  through  the  City,  ought  to 
make  houses  spring  up  rapidly  ; but  judge  by  the  reports  of 
the  Banks  in  the  District,  of  the  capability  of  individuals  to 
build.  Were  money  not  so  scarce,  100  houses  would  be 
erected,  where  now  we  see  only  ten. 

If  the  Congress  were  to  lend  1,000,000  of  dollars  annually  to 


VIII 


PREFACE. 


manufacturers,  the  nation  would  have  that  increase  of  capital 
productively  employed  in  making  cotton  and  woollen  goods,  and 
the  Treasury  would  receive,  on  a million,  30,000  dollars  in- 
terest on  the  loan  annually,  and  laborers  at  home  would  he 
paid,  instead  of  operatives  abroad,  and  the  manufacturers 
would  gain  a great  profit,  and  all  these  numerous  articles  would 
increase  the  wealth  of  the  nation  ; for  every  individual’s  gain 
composes  the  general  wealth.  Great  Britain,  after  paying  the 
price  of  the  raw  material,  has  an  annual  profit  of  g 150,000,000 
on  cotton  alone.  The  machinery  of  Great  Britain  is  estimated 
to  be  equal  to  an  hundred  million  of  hands.  Mr.  Stewart,  in 
his  speech,  states  the  woollen  goods  imported  here  to  amount  to 
g 8,000,000,  the  raw  material  only  costing  one-half.  Appropri- 
ations by  a Government,  to  promote  canals,  roads,  railways, 
and  machinery,  ought  to  be  put  under  the  head  of  disbursements , 
to  distinguish  them  from  expenditures  on  armies,  &c.  The 
former  produce  profits  as  seed  sown  produces  crops ; but  the 
latter  yield  no  return. 

The  following  are  a few  of  the  axioms  which  I wish  to  sub- 
stantiate : 

A paper  currency,  issued  by  a Government  in  full  credit 
is  preferable  to  specie — 

1st.  Because  the  former  can  be  regulated  so  as  always  to 
bear  a proper  proportion  to  the  industry  and  property  of  a 
nation,  whereas  the  latter,  being  an  article  of  commerce,  fluc- 
tuates in  quantity. 

2d.  Because  the  precious  metals  disappear,  being  hoarded 
or  exported  in  times  of  difficulty,  when  most  required,  whereas 
the  paper  money  always  remains. 

3d.  Because,  as  the  value  of  fixed  capitals  and  the  interest  of 
money  depends  upon  the  quantity  of  money,  it  is  requisite  to 
have  a sufficient  quantity  without  excess. 

4th.  Excess  of  paper  money  may  be  prevented  by  caution  in 
the  issues,  and  by  a deposite  of  4 per  cent,  stock,  into  which  any 
individual  holding  notes  may  convert  them.  In  this  case  the 
stock  operates  as  a safety  valve,  by  withdrawing  any  superfluity. 

5th.  Because  paper  money  is  more  cheaply  and  rapidly  trans- 
mitted from  one  quarter  of  the  country  to  another  than  specie. 


PREFACE. 


IX 


6th.  Because,  by  this  facility  of  remittance,  it  lowers  the 
rate  of  internal  exchange. 

7th.  Because  paper  money  permits  the  exportation  of  bul- 
lion and  specie  for  advantageous  mercantile  transactions,  with- 
out any  derangement  of  home  trade,  and  interchange  of  labor 
for  money. 

8th.  Paper  money  increases  manufactures  and  improve- 
ments, and  exports  bring  back  specie.  The  rapid  advance- 
ment of  nations  in  modern  times  is  much  more  owing  to  paper 
money  than  commercial  or  fiscal  regulations.  In  vain  have 
Governments  prohibited  the  exportation  of  specie  or  the  im- 
portation of  foreign  goods;  the  cunning  of  man  will,  in  a 
great  measure,  defeat  the  measures  of  Government  by  smug- 
gling. 

Until  long-rooted  prejudices  were  surmounted,  nations  la- 
bored under  great  inconveniences  for  want  of  money,  armies 
mutinied,  profitable  plans  were  suspended,  ruinous  fluctuations 
in  values  occurred,  and  the  industrious  productive  middle  class 
was  prevented  from  augmenting. 

Modern  writers  on  political  economy  all  recommend  a paper 
money  issued  by  the  Government,  and  disapprove  of  exclusive 
reliance  on  private  banks  issuing  promissory  notes,  redeemable 
with  specie  : for,  as  the  banks  issue  three,  four,  or  five  pound 
notes  for  one  pound  in  specie  in  their  vaults,  when  the  banks 
experience  a drain  of  specie,  they  call  in  their  notes  in  the  pro- 
portions abovementioned,  and  render  bankrupt  many  who  fail 
in  their  engagements  by  a proceeding  which  their  own  pru- 
dence could  not  anticipate. 

In  recommending  a National  Currency: 

I have  preferred  illustrating  my  positions  by  questions  and 
answers,  as  the  former  were  put  to  me  in  the  course  of  conver- 
sations, and  were  replied  to  orally  and  in  writing.  I rely  now 
upon  the  embarrassments  every  where  experienced,  to  obtain 
attention  at  this  crisis ; and  am  prompted  to  repeat  my  ar- 
guments by  the  old  Roman  axiom — 

“ Gutta  cavat  lapidemnon  vised ssepe  cadendo .** 

By  repetition,  truth,  at  length,  we  own, 

As  drops  of  water  penetrate  the  stone. 


2 


PREFACE. 


I have,  indeed,  been  encouraged  to  persevere  by  persons  who 
have  found  my  former  positions  verified  by  events,  and  who, 
having  surmounted  prejudices,  are  ready  to  receive  any  sug- 
gestions. 

Could  I once  have  the  subject  brought  before  Congress,  I 
am  confident  that  the  present  jargon  about  a specie  basis  would 
be  banished  by  ridicule.  It  is  called  a circulating  medium,  and 
is  represented  as  fluctuating,  being  an  epithet  taken  from  wa- 
ter, which  certainly  is  not  a basis. 

I will  conclude  this  with  the  termination  of  one  of  my  for- 
mer essays,  now  perhaps  forgotten: 

“ Beware,  ye  legislators,  how  you  create  a moneyed  aristo- 
cracy, as  dangerous  to  Government  as  Praetorian  bands  in  Rome, 
or  Janissaries  in  Turkey.  Let  me  repeat,  that  I behold  this 
country  as  the  asylum  of  the  afflicted,  the  sanctuary  of  the  op- 
pressed, on  which  the  eyes  of  philanthropists  are  every  where 
fixed  with  affection  and  anxiety.  Moral  feelings,  common  in- 
terests, and  general  principles,  unite  as  a band  of  brothers. 
■Whatever  appertains  to  the  general  welfare,  should  emanate 
from  the  General  Government.  'I  bis  is  the  spirit  of  our  Con- 
stitution ; this  is  the  central  axis  upon  which  the  Union  must 
revolve,  and  any  important  deviation  must  make  all  return  to 
chaos.  If  I am  assailed  for  this  interference,  I shall  reply* 
< Homo  sum  et  nihil  humani  a me  alienum  pnto*9  99 


DIALOGUE,  $jc. 


Question . What  produced  the  Banking  System  in  the  United 
States  ? 

Answer.  The  want  of  money  which  was  soon  experienced  by 
the  North  American  Colonies.  Franklin,  in  his  sagacious  and 
useful  writings,  gives  an  account  of  the  paper  money  first  issued, 
which  he  observed  to  be  productive  of  beneficial  consequences, 
by  stimulating  industry,  or,  to  speak  more  properly,  by  ena- 
bling the  enterprising,  stimulated  by  self-interest,  to  employ 
workmen,  and  to  set  up  tanneries  and  handicrafts  of  various 
kinds.  This  deep  researching  patriot  wrote  in  favor  of  State 
currency,  and  was  rewarded  by  his  State.  His  work  was  en- 
titled, “ On  the  Nature  and  Necessity  of  a Paper  Currency 
After  our  Revolution,  the  States  experienced  a want  of  money, 
but  found  themselves  prohibited  from  the  issue  of  paper  money 
by  the  Constitution,  which,  in  the  10th  section  of  the  first 
article,  says,  «No  State  shall  coin  money,  emit  bills  of  credit, 
“ or  make  any  thing  but  gold  and  silver  coin  a tender  in  pay- 
“ ment  of  debts.’*  Being  thus  embarrassed,  they  chartered 
banks,  whereby  they  not  only  increased  money  by  bank  notes, 
but  received  bonuses,  to  prevent  the  necessity  of  taxation. 
Thus  they  effected  through  banks,  what  they  could  not  do  of 
themselves.  There  is  an  old  law  axiom,  “Qui  facitper  alium , 
facit  per  se” — What  a man  does  through  another,  he  himself 
does.  Whether  this  ingenious  expedient  is  legal  or  not,  I will 
not  pretend  to  determine.  Many  State  Governments  even  set 
up  State  Banks,  the  history  of  which  would  be  very  interest- 
ing. At  the  commencement,  while  banks  were  lending  mo- 
ney, and  issuing  their  notes,  they  were  very  popular;  but  the 
evils  of  depreciation,  when  notes  are  carried  from  the  State, 
were  soon  complained  of,  and  soon  also  the  fluctuations  in  the 
value  of  property  by  curtailments,  were  experienced  as  a great 
calamity.  The  history  of  these  would  be  also  very  interesting. 

Question . You  have  stated  from  Franklin  the  advantages  of 
paper  money,  but  were  not  inconveniences  experienced  by  the 
colonies,  as  each  one  issued  a paper  currency  to  supply  the 
drain  of  specie  ? 

Answer.  Certainly  there  were,  as  we  experienced  the  same 
by  the  paper  mints  in  several  States  which  did  not  go  upon 
any  regular  system.  In  an  able  work,  entitled  “ An  Account 
of  the  European  Settlements  in  America these  inconveniences 


12 


are  alluded  to ; and  the  author,  supposed  to  be  Mr.  Burke,  af- 
ter saying  that  laws  themselves  are  hardly  more  the  cement 
of  societies  than  money,  and  societies  flourish  or  decay  accord- 
ing to  the  condition  of  these,  adds,  “I  should  imagine  that  one 
current  coin  for  the  whole  Continent  might  be  struck  here  or 
there,  with  such  an  alloy,  which  might  at  once  leave  it  of  some 
real  value,  and  yet  so  debased  as  to  prevent  its  currency  else- 
where, and  so  to  keep  it  within  themselves.  This  expedient 
has  been  practised,  and  with  success,  in  several  parts  of  Eu- 
rope, but  particularly  in  Holland,  a country  which  undoubted- 
ly is  perfectly  acquainted  with  its  commercial  interest. 99  This 
experiment  was  successfully  made  by  the  Bank  of  England, 
after  the  suspension  of  specie  payments.  When  it  was  ascer- 
tained that  not  only  its  gold  but  silver  coin  was  exported,  the 
hank  stamped  the  Spanish  dollars,  and  issued  them  first  at  5s. 
sterling,  and  then  at  5s.  6d.,  and  gave  them  currency  by  offer- 
ing to  receive  them  at  the  same  rate.  The  value  of  the  dollar 
as  a bullion  article,  is  from  4s.  2d.  to  4s.  3d.  Thus  a value 
was  given  to  them  of  more  than  20  per  cent,  merely  by  the 
Bank  receiving  them  at  that  rate.  It  was  not,  therefore,  their 
quantity  of  silver  that  made  them  current,  but  the  credit  given 
by  the  Bank’s  promise  to  receive  them. 

Question.  You  have  convinced  me  that  the  quantity  of  cur- 
rency in  a nation  has  a great  effect  on  the  industry  of  a na- 
tion, and  the  value  of  its  property — how  comes  it  that  so  small 
a sum  in  currency  can  carry  on  the  receipts  and  payments  of 
so  many  millions  of  people,  with  produce  and  property  amount- 
ing to  so  many  hundred  times  the  amount  ? 

Answer.  Consider  that  money  is  transferred  from  A to  B? 
and  from  B to  C,  &c.,  by  checks  ; so  that  the  sum  may  occa- 
sion three  hundred  payments  in  a year.  Mr.  Thornton  says 
that  the  transactions  of  the  Bank  of  England  amount  to  four 
million  pounds  sterling  per  diem,  or  above  five  hundred  mil- 
lion dollars  per  annum.  Were  the  currency  of  Great  Britain 
reduced  as  low  as  ours,  general  distress  would  immediately 
ensue.  I have  shown  that  it  is  the  great  duty  of  a Govern- 
ment to  have  a sufficiency  of  currency  to  preserve  its  credit. 
And  how  easy  it  is  to  regulate  the  quantity  : when  it  is  scarce, 
interest  is  high ; when  it  is  abundant,  interest  is  low.  It  is 
stated  that  the  deposites  of  moneyed  men  in  the  Bank  of  En- 
gland amount  to  £ 8,000,000  stg. ; of  course,  when  any  proper- 
ty yielding  income  is  to  be  sold,  or  any  property  likely  to  rise 
in  value,  a seller  can  always  find  a purchaser,  as  there  are  so 
many  competitors  wanting  to  lay  out  their  money.  In  this 
country  there  are  many  sellers  and  few  buyers  ; consequently 
the  price  of  land  and  of  labor  has  fallen,  and  we  daily  behold 
sacrifices  and  distresses  at  which  humanity  weeps. 


13 


Question.  Does  not  a sufficiency  of  money  enable  parents  to 
send  their  children  to  school  ? and  is  not  education  essential 
to  preserve  republican  institutions  ? 

Answer.  Most  certainly.  A Roman  sage  has  said,  “emol- 
lit  mores  nec  sinit  esse  feros it  softens  manners  and  pre- 
vents ferocity,  and  enables  man  to  love  truth  and  hate  false- 
hood, by  judging  for  himself,  instead  of  being  the  dupe  of 
demagogues.  The  following  is  too  gratifying  a statement  to 
be  omitted.  The  Baron  Ferussac  thus  addresses  a Parisian  au- 
dience : “ I present  to  your  notice  a map  of  the  kingdom,  which 
represents  by  shades , more  or  less  deep,  the  degrees  of  igno- 
rance or  information  that  prevail.  Those  departments  whose 
primary  schools  contain  a tenth  of  the  whole  population,  are 
colered  with  the  deep  tint  of  No.  10.  Those  departments  whose 
schools  contain  only  the  twentieth  part  of  the  whole  population, 
are  colored  No.  20.  Those  whose  schools  contain  only  the 
two  hundred  and  twenty-ninth  part  of  the  population,  I have 
colored  black , No.  229.  What,  then,  you  will  say,  does  France 
contain  departments  where  there  is  but  one  child  at  school  in  a 
population  of  229  inhabitants  ? Yes,  gentlemen,  such  a state 
of  things  does  exist;  and  even  still  worse.  But,  it  will  be  ob- 
served, this  must  be  undoubtedly  in  some  corner  of  Lower  Bri- 
tany.  No,  gentlemen.  Lower  Britany  is  rather  better.  It 
has  schools  which  contain  the  two  hundred  and  twenty- second 
part  of  its  population.  It  must  be  then  on  the  summit  of  the 
Alps  or  the  Pyrenees,  where  the  poor  inhabitant  has  to  strug- 
gle against  a rugged  climate,  in  cultivating  a contracted  ter- 
ritory. No,  gentlemen,  among  the  population  of  those  dis- 
tricts, popular  instruction  is  the  most  diffused , because  nothing 
gives  so  much  moral  energy  to  a people  as  to  have  to  struggle 
against  natural  obstacles.  That  obscure  place,  where  only  the 
two  hundred  and  twenty- ninth  part  of  the  human  species  fre- 
quent the  schools,  is  in  the  middle  of  the  kingdom,  in  a wide 
valley — under  a mild  and  serene  sky — in  the  region  of  the 
vine,  the  mulberry , and  the  maize — on  the  borders  of  a superb 
river ; it  is  called  the  garden  of  France  : it  is  Torraine  ! Look, 
on  the  contrary,  at  the  foot  of  the  Pyrenees,  the  country  of 
Henry  the  Great — Bearn ; it  contains  in  its  schools,  the  fifteenth 
of  its  population.  In  drawing  the  narrow  dark  line,  which 
you  observe,  from  Geneva  to  St.  Malo,  we  separate  the  North 
from  the  South  of  France.  On  the  North  are  thirty-two  De- 
partments, and  thirteen  millions  of  inhabitants ; on  the  South, 
fifty-four  departments,  and  eighteen  millions  of  inhabitants. 
The  thirteen  millions  of  the  North  send  to  school  740,846 
young  people ; the  eighteen  millions  of  the  South  send  to 
school  but  375,  931  pupils.  Let  us  now  observe  some  of  the 
remarkable  consequences  resulting  from  this  disproportion.  In 


14 


the  North  of  France,  notwithstanding  the  rigor  of  the  climate, 
the  intelligent  industry  of  the  people  enables  them  to  obtain 
from  the  soil  a sufficient  revenue,  and  127, 634, 765  francs  of 
the  national  impost  for  a surface  of  18,692,191  hectares ; while 
the  fifty-four  departments  of  the  South,  for  a surface  of  34,- 
841,235  hectares,  pay  only  125,412,969  francs  of  the  national 
impost.  Thus,  for  a million  of  hectares,  the  public  treasury 
receives  from  the  enlightened  portion  of  France,  6,820,000 
francs ; and  from  the  dark  portion , only  3,599,700  francs.  The 
superiority  of  the  public  revenue,  furnished  by  the  enlightened 
portion  of  the  kingdom,  is  also  particularly  obvious  in  the  pa- 
tent tax,  which  is  levied  at  an  equal  rate  throughout  the  king- 
dom. The  thirty-two  departments  of  the  North  close  a patent 
account  with  the  public  treasury  of  15,274,456  francs,  and  the 
fifty-four  Southern  departments  only  9,62 3,733.  Hence,  fa- 
vored by  superior  information  and  industry,  a million  of 
Frenchmen  on  the  North  side  of  the  line  pay  for  the  patents  of 
their  arts  1,174,958  francs,  and  a million  on  the  South  only 
534,662  francs.  I have  examined  the  list  of  patents  from  the 
1st  of  July,  1791,  to  the  first  of  July,  1825,  and  the  following 
are  the  results  : for  the  thirty-two  Northern  departments,  1689 
patents  ; for  the  fifty-four  Southern  departments,  413  patents/* 
&c.  &c. 

The  Baron  proceeds  in  his  lecture  with  similar  details  as  to 
the  higher  branches  of  science  in  all  the  universities,  colleges, 
academies,  and  polytechnic  schools,  which  present  similar  re- 
sults. In  fine,  he  and  Baron  Dupin  establish,  in  a manner  sa- 
tisfactory and  conclusive,  the  vast  importance  of  diffusing  the 
rays  of  knowledge  into  every  corner  of  a country,  however 
widely  extended. 

question . You  disapprove  of  the  Banks  of  State  Govern- 
ments : Do  you  approve  of  the  United  States*  Bank  ? and  do 
you  think  it  a legal  establishment  ? 

Answer . I cannot  presume  to  form  an  opinion,  as  the  Su- 
preme Court  has  given  a decision.  It  always  appeared  to  me 
that  Congress  legally  could  establish  Bankers ; but  that  they 
had  no  constitutional  right  to  compel  States  to  receive  Banks, 
which  issue  notes.  “ Delegatus  non  potest  delegare,"  is  an  old 
law  axiom.  The  General  Government  has  only  the  power  to 
issue  paper  money ; at  any  rate,  if  a State  be  adverse  to  the 
Bank,  on  account  of  probable  political  or  moneyed  consequence, 

I know  not  any  article  in  the  Constitution  which  gives  author- 
ity to  the  General  Government.  Bankers,  or  officers  to  collect 
and  pay  the  revenue  of  Government,  are  requisite  appendages 
to  the  Treasury  ; the  place  where  these  bankers  receive  and 
pay,  is  called  a Bank  ; but  could  the  framers  of  the  Consti- 
tution have  intended  that  money  makers  should  be  given  to  a 


15 


chartered  company,  and  that  the  Government  should  be  a large 
partner  of  7 shares  in  35,  and  receive  a bonus  besides  ? If 
the  State  of  Maryland  had  acknowledged  the  right  of  the  Ge- 
eral  Government  to  esntablish  an  Office  of  Deposite  and  Dis- 
count, and  confined  its  refusal  to  admit  Bank  notes,  which 
might  prove  injurious  to  the  State,  perhaps  they  would  have 
acted  legally.  I must  wait  for  the  Judges’  opinion  to  sanc- 
tion the  right  in  Congress  to  authorize  a delegate  to  coin  mo- 
ney, which  is  a power  exclusively  vested  in  the  General  Go- 
vernment. 

Question . What  think  you  of  the  following  letter  from  Mr. 
Cobbet  to  Mr.  Dallas,  dated 

“ London,  Jan . 13,  18  J 6. 

“ Sir  : I have  read  with  great  care  and  uncommon  inte- 
rest, your  proposition  to  Congress,  under  date  of  6th  Decem- 
ber, 1815,  for  the  establishment  of  a National  Bank;  and,  as  a 
part  of  the  reasons  which  you  urge  in  support  of  that  proposi- 
tion appear  to  be  founded  on  the  experience  of  a similar  insti- 
tution in  England,  I cannot  refrain  from  endeavoring  to  show 
you  what  some  of  those  effects  really  have  been,  and  what  is 
at  present  the  situation  of  this  country,  owing,  in  a great  mea- 
sure, to  the  existence  of  a great  banking  establishment  closely 
connected  with  the  Government. 

“ It  is  the  evil  of  a National  Bank,  as  experienced  by  us, 
to  which  I particularly  wish  to  draw  your  attention.  You 
profess,  and  I dare  say  very  sincerely,  so  to  frame  this  estab- 
lishment in  America,  that  it  shall  be  independent  of  the  Go- 
vernment. It  is  next  to  impossible,  indeed,  that  you,  or  any 
of  the  persons  in  whose  hands  the  Government  is,  should  have 
a desire  to  make  a Bank  what  our  Bank  has  long  been;  but 
while  there  is  a possibility  of  its  becoming,  in  any  hands,  or  at 
any  time,  any  thing  resembling  this  Bank,  it  must  be  a matter 
of  serious  dread  to  every  friend  of  America,  that  such  an  esta- 
blishment is  likely  to  take  place.  Sir,  it  is  as  a Bank  of  Dis- 
count that  this  establishment  exercises  the  most  pernicious  in- 
fluence. The  Directors,  who  are  a chosen  divan,  regulate 
these  discounts,  and  in  so  doing,  decide,  in  some  sort,  upon  the 
rise  or  fall,  the  making  or  the  ruin,  of  all  men  in  trade,  and, 
indeed,  of  most  olher  men,  except  such  as  have  no  capital  at 
all.  The  amount  of  these  discounts,  at  any  given  time,  is  sup- 
posed to  be  about  six  millions  of  pounds.  As  they  are  never 
for  more  than  two  months,  here  is  a sum  of  thirty-six  millions 
lent  every  year  to  individuals. 


16 


“ The  bills  for  discounts  are  sent  in:  the  Directors  consent 
or  not,  without  any  reason  assigned.  Now,  sir,  consider  the 
magnitude  of  the  sum  discounted.  It  is  a little  short  of  half  a 
million  of  dollars  a day,  Sundays  excepted.  It  is  perfectly 
well  known  to  you,  that,  in  such  a state  of  things,  almost  every 
man  in  trade  is  under  the  necessity  of  having  a regular  supply 
from  discounting.  If  he  be  excluded  from  his  fair  share  here, 
he  cannot  trade  with  the  same  advantage  as  other  men  trade. 
If  he  be  in  the  practice  of  discounting,  and  if  his  discounts  be 
cut  off,  he  cannot  go  on,  he  stops  payment,  and  is  frequently 
ruined  forever,  even  while  he  possesses  property,  which,  with 
the  fair  chances  of  time,  would  not  only  enable  him  to  pay  his 
debts,  but  to  proceed  in  prosperity.  I beseech  you  then,  sir, 
to  look  seriously  at  the  extent  of  the  dangerous  power  of  these 
Directors.  You  must  $ee  that  they  hold  in  their  hand  the  pe- 
cuniary fate  of  a very  large  part  of  the  community,  and  that 
they  have  it  in  their  power,  every  day  of  their  lives,  to  destroy 
the  credit  of  many  men,  and  to  plunge  their  families  into  shame 
and  misery.  If  I am  asked  for  their  motives  to  acts  like  these, 
to  pursue  such  partiality,  to  make  themselves  the  instruments 
in  committing  such  detestable  injustice  and  cruelty,  need  I 
point  out  to  you  that  they  have  been,  and  must  be,  constantly 
actuated  by  the  strongest  political  prejudices?  The  fact  is, 
however,  that  the  Bank  of  Kngland,  by  means  of  its  power  of 
granting  or  withholding  discounts,  has  been,  and  is,  one  of  the 
most  potent  instruments  of  political  corruption  on  the  one  hand, 
and  of  political  vengeance  on  the  other.  I myself  could  name 
twenty  men,  who  stood  very  high  in  trade  and  credit,  who 
have  been  totally  ruined,  reduced  almost  to  mere  beggary,  by 
the  stoppage  of  their  discounts  at  the  Bank,  without  any  other 
cause  than  that  of  their  having  taken  an  open  part  in  opposi- 
tion to  the  acts  of  the  Government.  This  is  so  notorious,  that 
men  are  not  ashamed  to  avow,  when  solicited  to  come  forward 
in  petitioning  or  remonstrating,  that  it  w7ould  be  their  ruin  with 
the  Bank  : men  who  burn  with  indignation  at  the  insults  offer- 
ed to  the  Public— men  who  talk  in  their  private  circles  in  the 
same  way  that  I am  talking  to  the  Americans,  dare  not  open 
their  lips  in  public,  dare  not  put  their  hands  to  a petition 
against  any  act,  or  intended  act,  of  the  Government.  And 
this  is  so  well  and  so  universally  understood,  their  doings  are 
regarded  as  so  certain  a cause  of  ruin,  that  no  man  expects 
them  to  expose  themselves  to  such  calamity.  Can  your  mind 
picture  to  itself  a more  potent,  and  at  the  same  time  a more  dis- 
graceful instrument  of  political  corruption  and  subjugation 
Answer.  I beg  leave  to  decline  giving  an  opinion  upon  this 
letter.  If  the  Bank  is  to  be  magnified,  and  its  branches  mul- 


17 


tiplied,  it  may  require  a larger  capital  than  the  Bank  of  Eng- 
land, as  our  population  and  property  increase.  Any  one  can 
decide  what  its  present  power  is,  and  what  it  may  become. 

Question.  If  a national  currency  were  beneficial,  surely  Con- 
gress would  have  introduced  one  before  this  time. 

Answer.  That  is  a non  sequitur : for  it  implies  that  a public 
body  will  not  leave  any  thing  undone.  Mr.  Madison  long  ago 
said  to  Congress  in  his  message,  (i  It  may  become  necessary 
“ to  ascertain  the  terms  upon  which  the  notes  of  the  Government , 
*•  (no  longer  necessary  as  an  instrument  of  credit ,)  shall  be  is - 
“ sued  upon  motives  of  general  policy , as  a common  medium  of 
“ circulation .”  A Committee  was  appointed  by  Congress,  of 
which  Mr.  Calhoun  was  Chairman,  who  promised  to  report, 
but  it  was  left  undone.  After  that,  a memorial  was  presented 
to  Congress,  and  another  Committee  appointed,  of  which  Mr. 
McLane,  of  Delaware,  was  Chairman  ; he,  too,  promised  to 
report,  but  it  was  left  undone.  In  short,  no  attention  has 
been  paid  to  the  subject,  notwithstanding  the  sufferings  of  the 
People. 

Question . What  reason  can  be  assigned  for  this  neglect  of 
so  important  a subject  ? 

Answer.  It  will  not  become  me  to  expatiate  upon  ignorance, 
prejudice,  timidity,  and  apathy.  It  appears,  at  first  sight,  a 
topic  which  does  not  afford  a field  for  eloquence,  although,  in 
reality,  no  other  can  unfold  sucli  opportunities  for  it.  A na- 
tional currency  will  enable  Congress  to  adorn  and  improve 
the  country  with  majestic  beneficial  works.  It  will  enable  in- 
dividuals to  cultivate  and  build,  and  make  many  useful  private 
undertakings.  It  will  facilitate  matrimonial  unions,  now  re- 
strained by  poverty.  It  will  enable  charity  to  relieve  the  dis- 
tressed. In  short,  it  will  scatter  plenty  over  a smiling  land. 

Question.  Mr.  Charles  Ganilh  is  a decided  bullionist.  He 
says  : “It  appears  certain  that  gold  and  silver  are  necessary 
“ to  the  formation  of  wealth,  and  that  without  them,  wealth 
“ cannot  possibly  exist.  This  theory  is  fully  confirmed  by 
“ history.  The  hordes  and  tribes  of  savages  discovered  in  the 
“ interior  of  Africa,  and  in  some  parts  of  Asia  and  America, 
4‘  that  were  destitute  of  gold  and  silver  coins,  though  they  had 
“ other  money,  were  yet  plunged  into  extreme  indigence  and 
44  misery,  and  all  accounts  of  travels  and  voyages  afford  scarce- 
ly a single  exception  to  this  general  fact.”  Again  he  says, 
“ The  increase  of  the  quantity  of  gold  and  silver  in  Europe, 
44  and  the  increase  of  its  manufactures  and  agriculture,  are 
“ two  events  which,  though  they  have  happened  nearly  at  the 
44  same  time,  yet  have  arisen  from  very  different  causes,  and 
“ have  scarcely  any  natural  connexion  with  one  another.  The 
3 


18 


“ one  has  arisen  from  a mere  accident,  in  which  neither  pru- 

dence  nor  policy  either  had  or  could  have  any  share  ; the  other 
u from  the  fall  of  the  feudal  system,”  &c.  Do  you  coincide 
with  him  ? 

Answer.  No.  I attribute  the  fall  of  the  feudal  system  prin- 
cipally to  money.  Workmen,  paid  for  labor,  became  indepen- 
dent of  their  chiefs.  Money  produced  a middle  class,  civili- 
zation, and  freedom.*  Certain  causes  co-operated,  it  is  true, 
to  accelerate  the  augmentation  of  all  kinds  of  industry.  I also 
deny  that  the  precious  metals  are  essential  and  indispensable 
for  the  formation  of  wealth.  Gold  and  silver  are  not  of  much 
value  in  use,  but  are  of  great  value  in  exchange. 

Question.  Why  is  it  so  ? 

Answer.  The  monarchs  have  chosen  to  make  them  the 
coin  of  their  countries,  and  raise  their  value  by  preferring 
them.  When  a Government  establishes  a Bank,  and  receives 
its  notes,  they  are  equal  to  the  precious  metals ; and  when 
even  a Bank  suspends  specie  payments,  if  a Government  con- 
tinues to  receive  its  notes,  they  retain  the  par  value,  unless  is- 
sued beyond  the  demand.  Were  the  Government  to  issue  its 
own  notes,  and  insist  upon  being  paid  in  them,  were  they 
scarce,  more  than  five  dollars  in  silver  must  be  paid  for  a five 
dollar  note.  More  of  them  would  be  required  annually,  as 
population,  capitals,  and  interchange  increased.  Were  four 
or  five  States  to  separate  from  the  Union  at  present,  and  to  es- 
tablish a currency,  they  would  have  an  advantage  over  the 
General  Government ; but  if  the  latter  had  previously  a cur- 
rency, the  State’s  notes  would  be  in  discredit.  The  national 
currency,  in  addition  to  its  other  advantages,  would  be  a ce- 
menter  of  the  Union.  I attribute  the  stability  and  rapid  ad- 
vancement of  the  Russian  empire,  in  a great  degree,  to  its  na- 
tional currency.  This  will  enable  it  to  overwhelm  the  Turks, 
who  have  no  good  financial  system. 

Question.  Does  not  an  increase  of  money,  when  it  is  scarce 
amongst  an  enlightened  and  industrious  People,  cause  their 
prosperity  ?. 

Answer . Yes— Adam  Smith  is  of  opinion,  and  all  writers  on 
political  economy  agree  in  this,  that  even  the  addition  of  a de- 
fective currency  is  preferable  to  having  a deficiency ; thus 
Banks  have  been  established  and  chartered  to  issue  notes,  pro- 
mising to  pay  in  specie,  though  experience  has  proved  that  they 
are  pregnant  with  numerous  evils. 

Question . Why  does  a diminution  of  the  necessary  quantity 
cause  distress  and  retardation  ? 

* See  Address  to  the  Columbian  Institute. 


19 


Jlnswer.  Suppose  a million  of  persons  require  four  millions 
of  dollars  for  marketing,  for  shopping,  for  payment  of  laborers, 
commerce,  &c.  : should  two  millions  be  withdrawn  from  the 
four  millions,  must  not  many  persons  be  unemployed,  and 
must  not  the  value  of  fixed  capitals  fall  in  price,  and  must  not 
many  persons  be  rendered  unable  to  educate  their  children  at 
schools,  and  to  aid  the  distressed,  and  to  subscribe  to  public 
improvements,  &c.  ? 

Question . Why  have  all  nations  used  the  precious  metals  for 
their  currency  ? 

Answer.  Because  they  are  not  in  abundance,  and  cannot  be 
quickly  multiplied,  and  the  labor  to  produce  them  makes  their 
value  very  much  stationary;  whilst  other  articles,  easily  produc- 
ed, soon  depreciate  by  the  introduction  of  machinery  and  skill. 

Question . All  the  mines  in  the  world  produce  a great  deal  of 
specie,  which  is  continually  going  forth  into  circulation  ; yet  there 
appears  very  little  increase  in  Europe,  or  in  the  United  States. 
How  do  you  account  for  this  ? 

Answer.  I may,  in  part,  satisfy  the  inquiry,  by  referring  to 
the  able  work  on  Political  Economy,  by  Baron  Storch,  pub- 
lished by  the  authority  of  the  late  Emperor  of  Russia.  He 
states  the  annual  produce  of  all  the  mines,  as  follows  : 
European  Mines  - - g 4,042,972 

Asiatic  do.  - 1,699,075 

American  do.  ....  59,088,416 

— g 64,831,063 

Baron  Humboldt  states  the  European  exports  of 
specie — 

By  the  Levant  trade  - - - g 5,440,000 

By  the  Cape  of  Good  Hope  - 23,800,000 

By  Astrachan  and  Siberia  - - 5,440,000 

34,680,000 

Remains  - g 30,151,063 
From  this  sum  must  be  deducted  the  consumption 
caused  by  gilding,  silvering,  converting  into 
plate,  watches,  &c.  Such  consumption,  Baron 
Humboldt  states, 

In  France,  to  be  - - - g5, 661, 250 

Mr.  Lowe,  in  Great  Britain  - 6,660,000 

Mr.  Lowe,  in  Geneva  - - 311,108 

12,632,358 

Here  is  a consumption  of  gold  and  silver 

in  three  countries  only,  of  g 12,632,358.  17,518,705 

But  of  this  balance,  there  would  probably  be  con- 
sumed in  Russia  and  the  German  kingdoms  12,000,000 


g 5,518,705 


20 


So  that,  upon  this  reasonable  calculation,  little  more,  annu- 
ally, than  five  millions  and  a half  would  remain  to  supply 
every  current  demand  of  America  and  Europe,  not  to  mention 
losses  at  sea,  &c.  which  we  know  frequently  occur.  Taking 
such  facts  and  circumstances  into  consideration,  is  it  not  evi- 
dent that  any  considerable  increase  of  specie  must  be  slow  ? 
Moreover,  the  produce  of  the  American  mines,  during  many 
years  past,  has  gradually  diminished ; and,  for  a few  of  the 
last  years,  those  mines  have  afforded  a less  quantity  of  gold 
and  silver  than  has  been  consumed  and  exported. 

In  the  year  1817,  I made  a calculation  of  the  circulands  in 
the  United  States,  estimating  them  at  g 5, 132,000,000 ; and 
about  the  same  time,  several  other  individuals  making  the  like 
calculations,  I was  gratified  to  find  how  nearly  the  results  cor- 
responded. Since  that  time,  nine  years  having  elapsed,  the 
quantity  of  those  circulands  has  greatly  increased  ; but  not 
the  currency.  And,  as  a proof  ot  this,  the  Government  of  the 
United  States  was  obliged  to  take  back  lands  sold  to  the 
amount  of  g 20,000,000,  merely  because  the  purchasers  proved 
the  impossibility  of  finding  money  to  pay  for  them  ? 

Question.  What  objections  are  there  to  metallic  money  ? 

Answer.  1st.  Being  articles  of  commerce,  they  are  export- 
ed, whenever  a bad  season  occasions  a failure  of  crops,  or  when 
agricultural  products  will  not  sell.  2d.  They  are  concealed, 
whenever  difficulties  and  danger  occur  to  a nation.  3d.  They 
are  ponderous,  and  not  easily  transmitted  from  one  place  to 
another,  and  therefore  carriage,  freight,  and  insurance,  are 
charged,  and  delay  in  remittance  is  occasioned,  and  therefore 
bills  of  exchange  are  preferred. 

Question.  Why  have  not  Sovereigns,  long  ere  this,  issued 
their  promissory  notes  ? 

Answer.  Because  they  were  despots,  and  the  People  could 
not  confide  in  them ; even  their  coins  they  adulterated,  and 
forced  foreign  merchants  to  take  them.  In  Turkey  the  coins 
are  adulterated  75  per  cent. ; therefore  all  bargains  are  made 
payable  in  foreign  coins.  The  stocks  or  bonds  of  despotic 
Governments  are  always  below  par.  Public  credit  is  of  mo- 
dern growth,  since  the  establishment  of  free  Governments,  in 
whose  punctuality  the  People  have  confidence.  Revolutionists 
issue  promissory  notes,  but  they  depreciate,  because  they  can- 
not give  security  for  the  redemption  of  them,  and  because  ne- 
cessity compels  an  issue  of  them  to  an  unlimited  excess. 

Question.  What  gives  a current  value  to  coins  ? 

Answer . The  receival  of  them  by  all  Governments.  Adam 
Smith  gives  an  instance  of  paper  money  being  higher  than 
metallic  money,  though  ot  the  same  nominal  value.  The 


Queen  of  Tuscany  insisted  upon  receiving  her  revenues  half  in 
her  coins  and  half  in  her  paper  money  ; the  latter  being  rather 
scarce,  was  at  a premium,  as  the  possessors  of  coin  were  oblig- 
ed to  purchase  them.  In  India,  the  Great  Mogul  coined  every 
year,  and  would  only  after  a few  months  receive  the  new  coin; 
thus  the  old  coins,  though  of  the  same  weight  and  purity,  de- 
preciated greatly,  and  the  sovereign’s  mint-master  became  the 
purchaser  of  the  old  coins  to  the  profit  of  the  Treasury. 

Question,  May  not  a free  Government  issue  notes  not  bear- 
ing interest,  and  receivable  in  all  payments  for  land,  duties, 
taxes,  &c.  ? and  will  they  not  be  current,  at  par,  as  bank 
notes,  or  the  precious  metals  ? 

Answer.  If  the  quantity  be  limited,  they  will ; but  may 
there  not  be  an  apprehension,  that  the  Government,  finding  the 
advantage  of  this  national  currency,  will  sooner  or  later  issue 
beyond  the  proper  bounds,  and  cause  a depreciation  ? 

Question,  Is  there  no  remedy  for  this  ? 

Answer.  I am  sure  there  is.  The  Government  may  insert 
on  each  note,  that  stocks  bearing  4 per  cent,  are  deposited  in 
the  Treasury,  and  any  individual  is  at  liberty  to  exchange  its 
notes  for  stocks,  which  are  always  locked  up  by  individuals 
as  income-yielding  property.  Thus,  if  everthere  be  a de- 
preciation below  that  rate  of  interest,  the  notes  will  be  re- 
turned to  Government.  This  is  a kind  of  safety  valve  in  a 
steam  engine,  or  a waste  in  a canal,  to  prevent  excess. 

Question,  Does  not  money  obey  the  permanent  law,  that 
every  thing  is  cheap  or  dear,  according  to  the  demand ; in 
other  words,  according  to  the  quantity  in  market,  and  the 
numbers  wanting  to  purchase  ? 

Answer.  Yes.  Interest  falls  or  rises,  according  to  abun- 
dance or  scarcity  of  money. 

Question.  May  not  the  power  to  issue  paper  money  induce 
the  Government  to  run  too  rapidly  in  debt  ? 

Auswer.  I have  no  apprehension  of  that.  First,  consider 
that  the  Representatives  are  chosen  by  the  People  every  two 
years,  and  are  responsible  to  them.  When,  therefore,  annu- 
al reports  are  made  to  them,  that  interest  has  fallen  to  five 
per  cent.,  may  they  not  suspend  issues  ? Will  they  not  be  cau- 
tious how  they  cause  excess  ? for  then  the  notes  will  return 
upon  them,  and  taxes  must  be  raised  to  pay  the  interest. 

Secondly.  Consider  that  Congress  will  only  select  proper 
objects  for  their  subscriptions  to  canals,  roads,  and  railways, 
and  surely  they  will  not  be  undertaken  unless  they  will  yield 
four  per  cent. 

Thirdly.  The  public  lands  will  rise  greatly  in  value,  and 
thus  an  increase  of  revenue  will  be  obtained. 


22 


Fourth.  As  some  Board  must  be  appointed  to  issue  the 
notes  according  to  the  acts  of  Congress,  Congress  may  pass  a 
law  that  the  Board  shall  cease  to  issue  when  interest  falls  be- 
low five  per  cent.,  and  they  may  annex  penalties  to  any  devia- 
tion from  this  law. 

Question.  Why  have  you  fixed  the  interest  at  four  per  cent.  ? 

Answer.  I have  fixed  four  per  cent.,  because  it  seems  not 
too  low  nor  too  high  an  interest  for  money.  The  British  three 
per  cents,  are  at  88,  consequently  they  yield  only  about  three 
and  a third  per  cent.,  or  £ 3 7s.  per  cent.  If  the  foreign  mer- 
chant sells  goods  here,  and  must  take  back  either  specie  or 
stocks,  he  will  calculate  that  silver,  being  ten  or  eleven  per 
cent,  lower  in  Europe  than  in  America,  he  will  lose  by  tak- 
ing away  dollars,  and  then  consider  whether  it  is  his  interest 
to  takeaway  stocks.  Were  the  stocks  offered  in  exchange  by 
Government  for  its  notes,  to  bear  five  per  cent,  he  could  afford 
to  run  the  risque  of  an  agent  here,  to  remit  his  stock  dividends 
and  to  pay  exchange  ; but,  at  four  per  cent.,  he  cannot  ; for 
he  will  lose  sixty  days  interest  on  the  bill  and  thirty  days  on 
the  passage. 

To  the  wisdom  of  Congress  I leave  the  fixing  the  interest  of 
the  stocks  which  are  to  be  exchanged  for  notes.  That  Go- 
vernment’s notes  will  be  current  at  par,  receivable  even  only  in 
the  Land  Offices,  was  proved  by  the  Yazoo  Certificates,  which 
were  only  receivable  in  the  Mississippi  and  Alabama  Land 
Offices.  Now  the  lands  only  yield  gl, 000, 000  per  annum. 
Then  they  will  yield  gs, 000, 000,  as  I have  elsewhere  shewn, 
and  increase  in  value  with  augmenting  population  and  dimi- 
nishing quantity  of  land. 

Question.  Is  not  the  suspension  of  specie  payments  often  de- 
sirable ? 

Answer.  Yes. 

Experience  lias  demonstrated  that  landed  property  must 
fall,  and  that  the  employ  of  the  industrious  must  be  diminished 
as  the  quantity  of  money,  if  not  before  excessive,  is  reduced. 
Yet,  since  the  time  of  Hamilton,  in  1790,  our  Secretaries  of  the 
Treasury,  and  our  Congress,  have  paid  no  attention  to  finance, 
unless  for  the  reduction  of  the  national  debt,  which  operates  as 
a reduction  of  the  currency. 

Since  Mr.  Hamilton’s  time  we  have  witnessed  the  suspen- 
sion of  specie  payments  by  most  of  the  banks,  and  the  sudden 
resumption  of  specie  payments,  and  the  establishment  of  a Na- 
tional Bank  on  a larger  scale  than  the  old  one  ; and  we  are 
now  feeling  the  effects  of  the  rapid  liquidation  of  a great  por- 
tion of  the  public  debt.  The  banks,  by  being  paid  off,  no 
longer  hold  stocks  as  a succedaneum,  should  their  specie  be 


23 


unexpectedly  drained  ; for  these  stocks  were  kept  to  be  sold 
on  an  emergency  to  raise  specie.  Foreigners,  also,  who  hold 
our  stocks  abroad,  by  being  paid  off,  cause  a greater  balance 
of  trade  against  us  and  withdraw  specie. 

We  have  read,  in  the  newspapers,  what  distress  has  been 
occasioned  in  New  York  and  the  Eastern  States  by  the  expor- 
tation of  three  or  four  millions  of  dollars,  which  has  caused  the 
Banks  to  call  in  notes  to  three  times  this  amount. 

A wise  and  humane  Government  would  investigate  whether 
the  currency  has  increased  with  the  increase  of  population 
and  of  property.  Foreign  interchange  is  carried  on  by  bills  of 
exchange  ; the  exporters  from  hence  of  cotton,  tobacco,  rice, 
&c.,  sell  drafts  upon  Europe,  which  importers  of  goods  pur- 
chase. The  excess  of  imports  must  be  paid  for  by  Govern- 
ment’s stocks  or  by  specie.  When  the  former  are  sent  abroad, 
the  effect  upon  internal  interchange  is  not  immediately  very 
perceptible;  but  when  specie  is  sent  away,  the  effect  is  almost 
instantaneous.  Purchasers  of  property  are  of  course  dimi- 
nished, and  the  merchants  find  it  difficult  to  meet  their  engage- 
ments ; debts  must  remain  unpaid,  and  law  suits  must  be  mul- 
tiplied. Individuals  must  reduce  their  consumption  of  articles, 
and  the  manufacturer  must  find  his  sales  less,  and  his  dues 
from  customers  slowly  come  in.  Want  of  money,  also,  must 
prevent  the  enterprising  from  subscribing  to  canals,  roads, 
and  railways,  and  from  setting  up  manufactories,  mills,  &c. 

The  tariff  is  a great  experiment.  If  European  capitalists 
are  induced  or  compelled  to  come  here,  internal  industry  will 
be  promoted  ; but  if  foreign  manufacturers,  having  a stock  of 
goods  on  hand,  can  successfully  smuggle  them  into  the  United 
States  by  the  St.  Lawrence  and  the  Lakes,  and  by  our  rivers 
and  bays,  our  home  manufactures  will  be  undersold,  and  our 
present  embarrassments  will  be  aggravated.  In  a few  months 
we  shall  ascertain  whether  the  self-interest  and  ingenuity  of  in- 
dividuals, can  counteract  the  watchfulness  of  the  Government. 

When  the  laws  of  the  Government,  well  administered,  pro- 
tect men  in  their  possession  of  property,  and  when  there  is  a 
sufficiency  of  money  to  cause  moderate  interest,  (say  from  four 
to  five  per  cent.,)  a nation  will  be  industrious,  emigrants  will 
resort  to  it,  and  manufactures  will  spring  up.  The  freight  to 
Liverpool,  the  cost  of  carriage  to  Manchester,  the  cost  on  re- 
turning to  Liverpool,  and  the  freight  back,  and  duties,  and 
commissions,  and  charges  of  merchandise,  would,  long  ago, 
have  made  this  a manufacturing  nation,  if  scarcity  of  money 
and  high  interest  had  not  prevented  them.  During  the  war, 
manufactories  sprung  up  like  mushrooms.  The  resumption  of 
specie  payments,  and  an  inundation  of  foreign  goods,  by  a 


24 


double  blow,  prostrated  domestic  commencements.  Financial 
foresight  ought  to  have  averted  this  destruction. 

When  men  are  thrown  out  of  employ  by  a scarcity  of  mo- 
ney,  their  children  cannot  be  educated,  and,  in  addition  to  the 
distresses  they  suffer,  their  moral  characters  are  deteriorated, 
and  their  healths  are  impaired:  marriages  also  are  checked. 
That,  in  this  new  country,  numerous  useful  undertakings 
would  give  employ  to  laborers,  all  must  acknowledge.  When 
States  borrow  from  abroad  to  accomplish  public  improve- 
ments, the  nation  must  suffer  by  becoming  tributary  for  annual 
interest,  and  the  accumulation  of  capitals  must  be  restrained 
thereby. 

If  such  consequences  are  occasioned  by  ignorance  in  finance, 
I will  not  apologise  for  persevering  in  my  endeavors  to  obtain 
attention  to  this  all-important  subject.  As  I decline  in  years, 
the  more  anxious  1 become  to  see  relief  afforded  to  the  commu- 
nity. 

The  following  extract,  from  to-day’s  paper,  I insert,  to  show 
bow  Americans  emigrate  : 

Texas . — The  following  information  relative  to  Texas  is 
copied  from  the  New  Orleans  Halcyon  and  Literary  Reposi- 
tory, of  the  25th  of  May.  It  contains  information  which  will, 
no  doubt,  be  new  to  many  of  our  readers  : 

“ Although  little  more  than  seven  years  have  elapsed  since 
the  Austins  began  their  colony  near  the  Rio  Grande,  it  now 
numbers  from  12  to  15,000  souls,  mostly  emigrants  from  the 
United  States.  Thousands  of  acres,  however,  remain  with 
the  patentee,  and  will  afford  immense  wealth  to  himself  and  to 
his  descendants. 

<<  On  the  opposite  side  of  Texas,  and  in  a quarter  possessing 
greater  advantages,  another  colony  is  fast  rising  into  import- 
ance under  the  patent  of  Col.  Milam.  There  are  200  families 
already  settled  on  the  alluvion  of  Red  River,  nearly  over 
against  Miller  county,  in  Arkansas.  The  cotton  lands  yield 
astonishing  crops  of  the  finest  cotton,  tobacco,  and  corn — in- 
numerable herds  graze  on  the  elevated  prairies — and  the  moun- 
tains are  known  to  contain  the  precious  metals.  The  colonists 
are  to  be  exempted  from  taxes,  and  the  merchandise  they  may 
import  will  pay  no  duties.’’ 

Question . Will  not  this  increase  of  cotton  make  the  price  fall 
still  lower,  and  cause  a greater  balance  of  trade  against  the 
United  States  ? 

Answer.  This  is  already  experienced  ; it  is  a natural  con- 
sequence to  be  calculated  upon. 


25 


Question.  Great  Britain  and  the  United  States  have  both  re- 
presentative governments,  and  have  good  laws,  well  administer- 
ed—why  is  there  so  great  a difference  in  their  wealth  ? 


Answer — 

Great  Britain  has,  in 
specie,  - £ 25,000,000  Stg. 

In  Bank  of  England 
notes  - - 25,000,000 

In  country  bank  notes  25,000,000 
Government  Funds  800,000,000 
Exchequer  bills  23,000,000 


The  United  States  have, 
in  specie  - - $ 15,000,000 

Bank  notes  - - 45,000,000 

Funded  debt  - - 60,000,000 


$120,000,000 


898,000,000 

More  than  4,000  millions  of  dollar';, 
besides  Notes  of  hand,  Bills  of  Ex- 
change, &c. 

The  population  is  15,000,000. — 
GreatBritain  has  a dense  population, 
and  machinery  equal,  as  is  estimated, 
to  100  million. 

Great  Britain  has  interest  of  4 per 
cent. 

Great  Britain  can  make  improve- 
ments by  subscriptions,  and  raise  any 
sum  in  a day,  for  any  plan  promising 

per  cent. 


The  population  is  12,000,000. 


The  United  States  have  interestfrom 
6 to  12  per  cent. 

The  United  States  want  moneyed 
capitals.  Individuals  have  not  money 
to  set  up  manufactures,  or  to  make  ca- 
nals, rail-ways,  roads,  &c. 


Question.  What  enabled  Great  Britain  to  recover  so  rapidly 
from  her  want  of  money  in  1 797,  though  carrying  on  a most 
expensive  war  ? 

Answer.  Her  paper  money.— -[See  the  address,  showing  that 
it  increased  machinery,  industry,  and  commerce.] 

Question.  Did  not  the  silver  evanesce  from  Great  Britain  in 
1796-7,  as  well  as  the  gold  ; how  was  the  want  of  crowns, 
half  crowns,  and  shillings,  supplied  ? 

Answer.  The  Bank  stamped  dollars,  worth,  in  general, 
from  4s.  and  2d.  to  4s.  and  3d.  and  issued  the  dollar,  first, 
at  5s.  and  afterwards  at  5s.  6d.  and  promised  to  receive  them 
on  the  same  terms.  The  stamp  was  made  by  Bolton’s  ma- 
chinery, to  prevent  forgery.  Here  was  a value  of  36  per  cent, 
given,  merely  by  the  Bank  credit  given.  Manufacturers  sup- 
plied notes  for  the  smallest  coins,  and  were  thanked  for  the 
relief  thus  afforded.  During  our  war,  barbers,  and  all  descrip- 
tions of  persons,  made  2,  3,  5,  10,  and  25  cent  notes. 

Question.  May  not  the  interest  of  money'  be  too  low  ? 

Answer.  I think  it  may.  It  is  becoming  too  low  in  Great 
Britain  ; therefore  moneyed  men  are  removing  with  their  capi- 
tals. The  monstrous  debt  is  a great  evil ; for  many  persons 
live  on  the  interest  abroad. 

Question.  What  enables  Great  Britain  to  pay,  on  her  funded 
debt  of  783,301,739  pounds  sterling,  an  interest  of  29^892,745 
4 


26 


pounds  sterling,  and  the  expense  of  management,  279,066 
pounds  sterling;  and,  on  the  unfunded  debt  of  23,743,300 
pounds  sterling,  an  interest  of  831,207  pounds  sterling  ; and 
to  support  her  vast  establishment  without  signs  of  decay  ? 

Answer.  Her  well-managed  financial  system.  If  she  had 
only  our  currency,  her  debt  would  be  destroyed,  and  her  capi- 
tal would  fall  nearly  to  the  level  of  ours,  and  her  industry 
would  be  reduced — in  short,  the  Minerva  would  lose  her  ener- 
gy and  activity  for  want  of  blood.  She  does  not  borrow  from 
abroad,  but  lends  to  foolish  nations  who  will  not  rely  on  their 
own  resources  and  credit,  but  only  look  to  foreign  loans. 

Question.  Why  this  aversion  to  borrowing  from  abroad  ? Is 
it  not  advantageous  to  borrow  at  5 per  cent,  and  to  obtain  from 
canals  and  roads  higher  dividends  than  the  interest  to  be  paid  ? 

Answer . Has  not  experience  proved  that  the  real  cost  al- 
ways exceeds  the  estimates,  in  respect  to  time  and  expense  ? 
Unforeseen  delays  will  occur,  and  accidents  not  anticipated 
will  arise.  Calculators  also  omit  to  insert  the  interest  of  at 
least  five  or  six  years  before  the  canal  or  road  becomes  produc- 
tive, and  also  do  not  include  the  loss  of  compound  interest. 
They  are  apt,  also,  to  overrate  the  profits,  by  taking  the  esti- 
mates of  Great  Britain,  where  the  population  is  so  dense.  It 
would  he  prudent,  therefore,  to  put  the  subscription  of  one  hun- 
dred at  the  real  cost  of  one  hundred  and  thirty  at  least.  I am 
averse  to  borrowing,  because,  by  the  Edinburgh  Review, 
9,000,000  pounds  sterling  have  already  been  sent  to  Great 
Britain,  in  Government  stocks,  State  stocks,  and  canal  stocks ^ 
besides  the  debts  due  by  individuals  who  receive  ironmongery, 
crockery,  and  goods,  on  credit.  The  important  canals,  roads, 
and  railways  already  in  contemplation,  will  require  loans  to 
the  amount  of  at  least  g 100,000,000.  Ought  we  not  to  pause 
before  we  thus  involve  ourselves  ? How  can  we  expect  an 
augmentation  of  specie,  if  we  are  to  pay,  by  exports,  seven  or 
eight  millions  of  dollars  without  receiving  any  return  ? Let 
us  also  consider  that  there  is  an  annual  consumption  of  the  pre- 
cious metals  in  plate,  plating,  gilding,  watch-making,  and  trin- 
ket-making.— [See  page  19*]  Have  not  several  of  our  banks 
already  shut  up ; and  must  not  more  cease,  as  our  mouldering 
basis  diminishes  ? By  the  debts  we  have  made,  on  which  in- 
terest must  be  paid,  the  exportation  of  specie  has  been  checked ; 
the  present  rate  of  exchange,  and  the  small  premium  on 
specie,  prove  that  the  efflux  has  commenced.  There  is  scarce- 
ly gold  enough  in  the  country  to  make  wedding  rings ; and  al- 
ready our  young  men  and  young  women  pine  in  celibacy,  be- 
ing prevented  from  marriage,  by  want  of  money  to  commence 
housekeeping. 


27 


question.  Can  an  estimate  be  formed  approaching  to  any  de- 
gree of  accuracy  of  the  currency  required  for  a given  amount 
of  capital  and  of  population  ? 

Answer.  That  must  depend  upon  the  denseness  of  popula- 
tion, the  activity  of  business,  and  the  collections  and  payments 
of  Government.  In  Great  Britain,  the  fixed  capitals  are  esti- 
mated at  2,000,000  sterling,  and  upwards,  and  the  notes  in  cir- 
culation are  76,000,000  pounds  sterling,  exclusive  of  the  thir- 
ty^millions  of  the  precious  metals,  viz  : 

Bank  of  England  notes  - - £ 25,000,000  Stg. 

Country  bank  notes  - 25,000,000 

Exchequer  bills  - 26,000,000 


£ 76,000,000 


Besides  800,000,000  of  national  debt,  which  operates  as  a cir- 
culating medium  in  large  purchases  and  sales.  Now,  let  us 
give  a statement  of  our  moneyed  situation  to  a population  of 
12,000,000  of  whites,  and  capital  of  §6)000,000.  We  have 
§ 15,000,000  in  specie  in  bank,  and  §45,000,000  of  notes  in 
circulation.  I will  exclude  the  specie  of  both  countries  : then, 
it  will  appear,  that  Great  Britain  has  § 365,000,000  for  a po- 
pulation of  15,000,000,  and  we  have  §45,000,000  for  a popu- 
lation of  13,000,000.  The  bullionists  state  that  paper  money 
drives  away  all  the  specie  ; but  Great  Britain,  after  her  specie 
had  vanished,  in  1797,  by  increasing  paper  money,  doubled 
her  exports,  and  brought  back  raw  materials  and  specie, 
an  article  of  commerce.  The  report  of  her  mint  proves 
that  she  coined,  last  year,  more  than  our  mint  has  coined 
since  our  independence.  Knowledge,  implements,  machine- 
ry, skill,  and  industry,  constitute  the  wealth  of  a country. 
God  has  given  the  unceasing  stimulus  to  production,  self-inte- 
rest ; and  the  important  investigation  for  statesmen  is,  what 
ought  to  be  the  circulating  medium,  which  is  the  heart’s  blood 
of  a nation.  If  man’s  blood  were  an  article  of  commerce,  and 
infusion  could  give  health  and  strength,  how  many  would  be 
like  Hercules,  and  how  many  would  be  pale,  feeble,  languish- 
ing.— [See  Crawford’s  report  in  1820.] 

question.  Whence  do  you  take  your  estimate  of  our  capitals  ? 
Answer.  About  twelve  or  fifteen  years  since,  several  per- 
sons, nearly  at  the  same  time,  came  to  very  nearly  the  same 
result,  that  our  capitals  amounted  to  §5,000,000;  but, 
since  that,  their  values  have  much  fallen,  by  the  diminution 
of  our  currency ; and,  though  our  population,  agriculture, 
and  buildings,  &c.  have  increased,  yet  such  has  been  the  de- 
preciation of  property,  that  I cannot  value  our  capitals  at  more 


28 


than  g 4, 000, 000.  Thus,  our  citizens  have  become  tempora- 
rily poorer  g 1,000,000  — See  the  report  of  a committee 
in  Pennsylvania,  stating  the  increase  of  suits,  and  the  depre- 
ciation of  estates,  to  the  amount  of  three  or  four  hundred  mil- 
lions of  dollars,  in  consequence  of  the  sudden  resumption  of 
specie,  and  the  rapid  diminution  of  bank  notes.  This  reduc- 
tion is  very  low  : for,  wherever  I have  travelled  in  Virginia,  I 
have  ascertained  that  estates  have  fallen  sixty-six  or  two- 
thirds  per  cent. 

Question . You  have  stated  that  paper  money,  introduced  as 
a substitute,  does  not  drive  money  away — does  not  experience 
disprove  this  assertion  ? 

Answer . I admit  that,  when  specie  can  be  advantageous- 
ly exported  to  bring  back  something  wanted  at  home,  mer- 
chants will  convey  it  away  : and  is  not  this  one  advantage  pro- 
duced by  a good  paper  circulation,  which  can  supply  the  place 
of  specie  ? If  we  gain  by  the  exportation  of  specie,  do  we  not 
lose  by  keeping  it  at  home  ? Is  not  the  whole  property  of  the 
nation  a better  basis  for  the  currency  of  a country  than  notes 
of  banks  relying  upon  a few  millions  of  dollars,  which  always 
disappear  in  times  of  need. 

Question.  You  have  shewn  that  15,000,000  of  subjects,  in 
Great  Britain,  have  76,000,000  of  notes,  or  5T6T  pounds 
sterling  per  head — what  additional  quantity  of  national  cur- 
rency do  we  require  ? 

Answer.  As  we  have  now  about  45,000,000  of  notes  for 
12,000,000  of  whites,  were  I to  allow  only  half  the  quantity  in 
circulation  in  Great  Britain,  we  should  require  an  addition  of 
more  than  g 200,000,000  : but  I will  strike  off  one  hundred, 
and  say  g 100,000,000. 

Question . Would  you  recommend  that  Congress  should  issue 
this  sum  in  notes  at  once  ? 

Answer.  Certainly  not.  Congress  should  gradually  issue 
them,  and,  by  the  rate  of  interest,  Congress  would  soon  ascer- 
tain how  the  notes  were  absorbed.  Should  a drought  happen 
In  any  State,  Congress,  by  laying  out  notes  on  a public  im- 
provement in  that  State,  would  enable  the  people  to  purchase 
food,  and  might  avert  a famine  and  improve  the  State.  More- 
over, the  notes  thrown  into  circulation  will  enable  individuals 
to  erect  mills,  barns,  &c.  and  to  subscribe  to  junction  canals 
and  roads,  and  thus  the  capitals  will  be  increased. 

Question.  Howr  much  do  you  calculate  that  the  public  trea- 
sury will  gain,  by  the  national  currency,  in  twenty  years  ? 

Answer.  I am  of  opinion  that  it  will  have  gained  at  least 
g 100,000,000  in  dividends  and  increased  sales  of  land.  The 
State  governments  will  also  have  gained,  by  borrowing,  2|  or 


29 


3 per  cent.  Let  it  be  remembered  that,  if  our  white  popula- 
tion be  now  12,000,000,  in  25  years  it  will  be  24,000,000  ; in 
50  years,  it  will  be  48,000,000  ; in  75  years  it  will  be 
96,000,000  ; and  in  100  years  192,000,000.  Let  the  reader 
strike  off  the  92,000,000,  or  any  portion  he  pleases,  still  the 
profit  on  the’currency  must  amount  to  a large  sum,  annually. 

Question.  Will  not  the  power  of  making  a Currency  Board, 
and  of  issuing  so  many  notes,  give  too  much  influence  to  the 
President  and  his  Administration,  and  render  the  State  go- 
vernments less  independent  ? 

Answer.  In  my  opinion,  the  currency  will  operate  in  every 
way  favorably  for  the  cementation  of  the  Union,  kand  the  pre- 
servation of  the  State  governments.  If  the  latter  borrow  mo- 
ney at  2£  or  3 per  cent,  will  not  their  applications  be  present- 
ed to  Congress  ? and  must  not  the  sanction  be  granted  by  Con- 
gress, which  consists  of  delegates  from  the  counties  of  States, 
where  they  first  came  into  the  world,  where  their  parents  live, 
where  they  have  their  estates  and  occupations,  and  to  which 
they  return  ? Will  not  w ealth  make  them  independent,  as  po- 
verty now  renders  them  dependent  ? Will  the  representatives 
conspire  against  their  own  States,  and  be  guilty  of  felo  de  se  ? 
The  danger  is,  lest  scarcity  of  money  should  prevent  parents 
from  educating  their  children,  and  thus?  render  the  sovereign 
people  ignorant  and  impassioned.  Will  not  the  Currency 
Board  be  responsible  to  Congress,  who  will  have  monthly  and 
annual  reports  ? The  framers  of  the  Constitution  intended  that 
the  President  and  the  Heads  of  Departments  should  submit 
their  propositions  for  the  general  good  to  the  deliberative  body  ; 
for,  in  a multitude  of  counsellors,  there  is  wisdom.  When  the 
citizens  of  States  shall  be  more  wealthy,  they  will  be  more 
anxious  to  preserve  social  order.  In  times  of  embarrassment, 
thelow7er  class  will  always  clamor  for  a change.  When  a sufficien- 
cy of  money  makes  a large  middle  class  of  enlightened  men,  they 
will  not  fly  to  extremes,  and  merit  the  epitaph  of  the  valetudi- 
narian, viz  : I was  well , wished  to  be  better , and  here  I lay," 
— but  let  me  refrain  from  politics  ; and  let  me  add,  that,  could 
I see  a possibility  of  a National  currency  destroying  the  fe- 
derated States,  I would  stump  my  pen,  throw  the  ink  away, 
and  tear  my  essays.  When  apprehensions  have  no  definite 
point,  I cannot  grasp  them— -jealousy,  suspicion,  and  hypocon- 
driacism  are  disorders  of  the  brain,  not  easily  removed. 

Question.  When  the  currency  is  reduced  one-half,  does  not 
every  thing  fall  in  value,  in  the  same  ratio  ? this  is  asserted. 

Answer . I must  dissent  to  this  position,  that,  “when 
the  currency  of  a country  is  reduced  one-half,  the  value  of 
every  thing  is  reduced  in  the  same  proportion,  and  that  the 


community  is  not  affected  thereby.”  Permit  me  to  ask,  if  A 
sells  his  estate  for  $ 2,000,  which  has  fallen  in  value  from 
8 4,000,  will  the  merchant  sell  his  tea,  his  sugar,  his  liquor, 
his  cloth,  &c.  at  half  price,  because  he  informs  him  that  the 
quantity  of  money  being  diminished  one-half,  the  remainder 
has  risen  double  in  value  ? May  not  the  seller  reply,  that  the 
price  of  teas  and  sugars  must  soon  be  raised,  as  the  supply  in 
market  is  very  small  ? When  A wants  to  purchase  wheat, 
may  not  the  farmer  say  the  crops  have  generally  failed,  and  I 
must  demand  a higher  price  ? When,  also,  A wants  to  employ 
a laborer,  should  he  say  to  the  laborer,  your  usual  wages  are 
50  cents  per  diem,  but  money  has  risen  in  value  twofold,  I will 
therefore  pay  you  only  25  cents  ? Will  the  laborer  be  per- 
suaded to  consent  ? May  he  not  say,  I will  rather  work  at 
home,  or  migrate  : 25  cents  per  day  will  not  support  my  fa- 
mily ? When  a manufacturer  finds  money  returning  slowly, 
may  he  not  be  compelled  to  dismiss  many  of  his  operatives  ? 
and  will  not  this,  whilst  the  industrious  lose  their  means  of 
subsistence,  diminish  his  profits,  and,  consequently,  those  of 
the  nation  ? 

Question.  How  will  the  proposed  national  currency  operate 
upon  the  Bank  of  the  United  States  ? 

Answer.  It  will  give  an  auxiliary  currency  in  high  credit, 
equal  to  gold  and  silver,  as  a basis  for  its  notes.  I must  own, 
however,  that  it  will  considerably  reduce  its  profits  by  pur- 
chasing domestic  bills  of  exchange.  By  the  late  reports  of  the 
Bank,  their  purchases  of  domestic  exchange  amounted  to  the 
large  sum  of  22,084,222,  on  which  they  gained  451,203. 
This  profit  on  internal  exchange  was  of  course  paid  by  the 
merchants,  and  deducted  so  much  from  their  gains  on  trade,  or 
aggravated  their  losses.  The  merchants,  also,  by  taking  bills 
instead  of  notes,  are  obliged  to  wait  till  they  become  due,  and 
thus  have  their  negotiations  impeded  , ^whereas,  if  they  had  Go- 
vernment’s notes,  they  would  be  saved  from  exchange  and 
delay. 

Question . Will  not  the  issuing  of  a national  currency  be 
complained  of  by  the  Bank  ? 

Answer.  They  cannot,  with  justice,  complain ; on  the  con- 
trary, the  public  has  now  to  complain  of  this  exchange,  for 
Mr.  Dallas  induced  Congress  to  charter  the  Bank  by  promis- 
ing to  destroy  exchange,  and  the  loss  on  notes  of  State  Banks, 
to  which  the  public  is  still  liable,  as  is  demonstrated  by  brokers 
in  every  town. 

Question.  The  Bank  has  increased  its  loans  8,365,884  IT. 
Is  not  this  beneficial  to  the  community  ? 


31 


Answer.  Individuals  have  become  so  much  more  in  debt* 
and  have  to  pay  so  much  more  interest,  viz  : g'501,957  per  an- 
num, and  are  liable  to  protests,  prosecutions,  judgments,  and 
sales.  The  community,  I acknowledge,  benefits  by  the  increas- 
ed circulation  of  g 7,588, 868  81  ; but,  would  not  the  public 
have  been  benefitted  more,  if  the  Congress,  for  the  nation,  had 
thrown  this  sum  into  circulation  in  the  mode  proposed — by 
subscriptions  to  canal,  and  railway,  and  road  companies ; for 
individuals  would  have  avoided  the  necessity  of  borrowing  so 
much  at  six  per  cent,  and  a better  currency,  receivable  every 
where,  not  liable  to  diminution  by  a withdrawal  of  specie, 
would  have  been  in  circulation. 

The  following  statements  of  1822  and  1828,  are  valuable 
documents  : 


State  of  the  Bank , August  30,  1822. 

Capital  paid  in,  % 34,992,139  63 

The  circulation,  5,456,891  90 

Deposites— Public,  3,559,792  96 
Private,  3,216,699  78 

6,776,492  74 

Due  to  sundry  Offices  and  Banks, 
and  to  individuals  in  Europe,  1,964,898  36 

Unclaimed  Dividends,  129,741  28 

Contingent  Fund  to  meet  losses,  3,743,699  00 

Discount,  exchange,  and  interest, 
since  July,  388,237  01 

Profit  and  Loss,  51,897  07 

g 53,504,196  99 

DISTRIBUTED. 

Funded  Debt,  % 13,020,469  27 

Loans,  viz  : 

Personal  security,  22,072,405  46 
Bunded  debt,  67,958  13 

Domestic  bills,  2,713,760  30 

Debt  of  Smith  & B.  1,357,457  23 
Foreign  bills,  21,599  76 

Bank  Stock,  5,974,725  80 

Mortgages,  8,000  00 

32,218,876  68 

Due  by  banks,  &c.  1,650,869  73 

Real  estate,  587,102  38 

Bonus,  premium,  &c.  1,180,880  00 

Banking  houses,  834,922  15 

Notes  of  State  banks,  664,642  56 

Specie,  3,346,434  22 

g 53,504,196  99 


State  of  the  Bank,  August  1,  1828. 

Capital  paid,  34,996,269  63 

The  circulation,  13,045,760  71 

Deposites— Public,  7,301,746  43 
Private,  6,563,479  06 

13,865,225  49 

Due  to  sundry  banks  and  to  indi- 
viduals in  Europe,  1,054,361  29 

Unclaimed  dividends,  456,005  76 

Contingent  fund  to  meet  losses  4,380,645  53 
Discount,  exchange,  and  interest,  378,378  87 
Profit  and  loss,  1,518,298  61 

8 69,694,945  89 


Funded  debt, 


16,930,969  51 


Personal  security,  29,316,745  45 

Funded  debt,  142,212  73 

Domestic  bills,  6,013,890  15 

Smith  & B.  612,760  44 

Foreign  bills,  340,185  93 

Bank  stock,  1,850,380  56 

Mortgages  79,907  38 

Debts  chargeable  to 
Contingent  fund,  2,223,678  21 


Real  estate, 

Bonus,  premium,  &c. 
Banking  houses, 

Notes  of  State  banks, 
Specie, 


-40,584,760  85 
2,292,652  11 
755,529  86 
1,079,926  43 
1,458,099  73 
6,593,007  35 

8 69,694,94 5 89 


Question . Is  not  the  increase  of  specie  a good  sign  ? 

Answer . The  specie  of  the  Bank  has  increased  since  1 822 
above  three  millions;  why  1822  is  chosen  for  a contrast,  I 
know  not,  the  amount  is  now  6,593,007  35  : the  amount  of 
specie  in  1826,  was  6,616,049  98. 

Question . Did  not  Mr.  Dallas,  the  great  promoter  of  the 
Banks,  promise  that  the  Bank  would  do  away  exchange  and 
discounts  on  State  Bank  paper  ? 

Answer . His  words  are  these  : 44  The  Bank  will  possess  the 
mearis  and  opportunities  of  supplying  a circulating  medium  of 
equal  use  and  value  in  every  State , and  in  every  district  of  every 


32 


State,  and  it  will  aid  and  lend  the  State  Banks*”  This  was  the 
great  inducement  for  establishing  the  Bank. 

I am  sorry  to  see  the  debts  due  to  the  Bank  increased 
from  - 32,218,876  58 

to  - ' - - 40,584,760  85 

increase  8,365,884  27 

Question.  Is  not  6,563,479  06  a small  sum  for  private  de- 
posites in  the  mother  Bank  and  its  twenty  branches  ? 

Answer.  I must  think  so,  when  I consider  that  by  these  de- 
posites,  the  Bank  must  be  pauHts  annual  interest  on  nearly  30 
millions  of  discounted  notes,  and  that  purchases  must  be  made 
of  property  estimated  at  6,000,000,000,  say  to  the  amount  of 
20, 000, 000  only,  and  that  the  Government’s  revenue  of  above  20 
millions  must  be  paid,  and  the  national  lands  paid  for,  and 
mercantile  transactions  performed ; it  is  true,  that  the  State 
Banks  have  also  some  deposites,  but  they  cannot  be  very  large, 
as  the  State  Banks  are  checked  in  their  issues  by  the  mam- 
moth Bank  and  branches  ; this  smallness  of  deposites  accounts 
for  the  lamentable  depreciation  of  fixed  capitals,  in  lands  and 
houses,  &c.  : our  population  and  our  estates  are  increasing  an- 
nually, and  our  currency  ought,  therefore,  to  keep  pace  with  it. 

Question.  If  money  be  scarce,  as  you  seem  to  think,  how  do 
you  account  for  the  price  of  our  stocks  ? by  the  last  accounts, 
our  American  funds,  New  York  fives  were  in  London  95  and  96. 

Answer.  The  British  3 per  cents  being  at  87  and  88  : the 
moneyed  men  in  Great  Britain  purchase  5 per  cents  here ; and, 
although  there  is  a loss  on  exchange,  yet  they  obtain  more  in- 
terest from  our  funds  than  from  the  British,  and  there*  is  full 
as  much  confidence  in  our  public  credit  and  punctuality  as 
in  their  own  nation. 

Question.  Why  are  not  State  Bank  stocks,  and  other  in- 
come-yielding property  higher  ? 

Answer.  The  British  moneyed  individuals  are  not  acquaint- 
ed with  these  speculations,  and  have  no  knowledge  of  charac- 
ters to  employ  as  agents  to  remit  dividends.  We,  on  the  spot, 
would  purchase,  had  we  money.  Most  men  find  it  difficult  to 
pay  Bank  discounts.  In  my  travels,  I found  the  best  estates 
depreciated  three-fourths.  I have  known  of  the  sale  of  landed 
estates  at  a greater  depreciation. 

Question.  You  state  that  the  property  of  the  nation  is  the 
proper  basis  of  a currency,  and  not  evanescent,  precious  met- 
als ! Can  you  illustrate  your  position  by  any  diagram,  to  strike 
our  judgment  through  the  sight  ? 

Answer.  I will  endeavor  to  do  so. 


33 


You  perceive  the  national  notes  are  independent  of  specie, 
which  may  increase  or  decrease  without  affecting  our  circula- 
ting medium-  I will  now  give  you  the  inverted  ticklish  pyra- 
mid, which  our  present  system  represents  : 


This  inverted  pyramid  represents  all  the  national  property 
and  industry,  dependant  on  the  small  sum,  making  only  a 
333d  part  of  the  value  of  the  property 
5 


34 


Whenever  specie  has  vanished  by  hoarding,  consumption,  and 
exportation,  the  pyramid  finds  its  proper  base,  and  prosperity 
ensues.  We  have  experience  for  our  guide,  but  many  will  not, 
few  dare  to  think,  the  remainder  will  not  encounter  prejudices. 
The  moneyed  interest  confuses  the  intellects  of  common  sense, 
and  of  men  with  understandings  sound  enough  in  the  common 
concerns  of  life,  who  talk  of  intrinsic  value,  as  if  demand  did  not 
regulate  the  value  of  every  thing.  Gold  and  silver  are  of  little 
value  in  use,  but  are  artificially  made  of  high  value  in  ex- 
change, for  Governments,  imitating  each  other,  have  made  the 
precious  metals  the  coin  or  money  which  they  will  only  re- 
ceive. When  Great  Britain  had  all  her  specie  exported,  the 
nation  took  notes  based  on  the  property  of  the  nation.  Thus 
the  nation  rose  like  Antaeus  from  his  fall  : increase  of  money 
increased  industry,  and,  consequently,  productions ; so  that,  in 
a few  years,  exports  were  doubled  ; and  raw  materials,  and 
luxuries,  and  specie,  came  from  abroad.  The  wealth  of  a na- 
tion consists  of  capitals  produced  by  industry,  and  of  the  an- 
nual products  of  genius  and  labor  brought  into  action  by  a 
good  financial  system. 

Question.  You  attribute  the  wealth  of  countries,  and  their 
industry,  in  a great  degree,  to  the  quantity  of  currency  ; how 
do  you  explain  this  ? 

Answer.  I will  take  Great  Britain  for  my  example. 

Income.  Exchequeb. 


£ s.  d . 


17,894,409  4 1 

18,438,707  4 7* 

6,811,226  8 0 


Customs 

Excise 

Stamps 


Total  54,486,687  15  2 


Value  of  imports,  £ 37,714,021  sterling;  do.  of  exports, 
JE51,044,658  ; vessels  inward,  tons,  2,676,263;  do.  outward,— 
In  short,  look  at  the  statistical  account,  and  you  will  form 
a tolerably  correct  idea  how  much  currency  is  required 
to  pay  and  receive,  for  such  products  and  consumption, 
as  you  may  judge  of  the  water  or  steam-power  to  turn  a 
quantity  of  wheels.  When  there  is  a great  amount  of  notes 
in  circulation,  must  not  every  one  have  more  or  less  of  them 
at  command  ? Were  the  Southern  States  to  have  a sufficiency 
of  money  to  set  up  manufactures  and  packets,  the  [number  of 
European  emigrants  would  surprise  persons  who  do  not  consi- 
der that  the  surplus  population  would  flow  to  where  they  will 
be  employed.  It  is  a common  error  to  deem  money  only  a® 


35 


effect  of  industry,  and  not  a cause.  Were  the  quantity  of  cur- 
rency diminished  one-half,  could  the  same  quantity  of  raw  ma- 
terials be  bought,  and  the  same  number  of  operatives  employ- 
ed? Great  Britain  coined,  in  1826,  gold,  £5,896,641  ster- 
ling ; silver,  £ 608,605.*  The  bullion  was  imported  by  having 
a favorable  balance  of  trade,  which  paper  money  occasioned. 
Were  a bad  harvest  to  cause  an  unfavorable  balance,  the  spe- 
cie would  be  exported,  and  the  notes  must  be  increased  to 
supply  their  place,  or  operatives  must  be  turned  off,  and  pro- 
duct and  consumption  diminished.  Our  imports  amount  to 
g 79,484,068,  and  our  exports  to  g 82,324,827  ; of  domestic  ar- 
ticles, g 58,921,691,  and  of  foreign,  g 23,403,136.  We  have 
more  hands  employed  than  in  Great  Britain,  though  our  popula- 
tion is  nearly  the  same  : for  we  have  fewer  troops,  a smaller 
navy,  fewer  State  creditors,  a small  hierarchy,  fewer  servants, 
tax-gatherers,  &c. — -fruges  consumer e nati,  When  we  had 
a sufficiency  of  paper  money,  during  the  war,  roads  were  sub- 
scribed to,  and  numerous  improvements  were  making  every 
where,  but  now  subscriptions  cannot  be  raised,  and  Corpora- 
tions tax  proprietors  of  houses  and  lots,  nolens  volens , to  make 
a canal.  Were  Congress  to  issue  only  ten  millions  of  dollars 
in  notes,  as  an  experiment,  all  eyes  would  be  opened. 

Question , May  not  Congress  object  to  the  appointment  of  a 
Board  to  make  a currency,  and  may  they  not  deem  it  a ha- 
zardous novelty  for  a Government  to  authorize  the  loan  of 
money  ? 

Answer,  If  you  advert  to  the  financial  system  of  Russia, 
published  in  the  National  Journal,  you  will  ascertain  that 
there  is  a Grand  Board  of  Superintendence,  entitled— 

1st.  “ The  Council  of  the  Credit  Establishments ” which 
makes  a published  report  annually. 

2d.  There  is  a Board  entitled  Bank  of  Assignment , which 
has  issued  595,776,310  roubles.f  This  circulating  medium 
has  caused  the  rapid  advancement  of  the  nation,  which  saves 
interest  on  this  sum,  and  avoids  borrowing  from  abroad,  in  a 
great  degree. 

3d.  A Commission  of  Redemption,  This  Board  attends  to 
the  reduction  of  the  public  debt,  &c.  This  is  not  wanted  here. 

4th.  A Loan  Bank . The  loans  amounted  to  32,623,683. 
This  Bank  receives  deposites,  and  is  a loan  bank,  on  securi- 
ties of  the  Government.  The  operations  amounted  to  198, 
772,000  roubles. 

*The  total  value  of  gold,  silver,  and  copper,  coined  since  the  establishment 
of  the  United  States*  Mint,  to  31st  December,  1827,  $30,525,138, 

t Where  the  rouble  is  mentioned,  it  is  meant  to  say  3s.  2d, 


36 


5th.  A Commercial  Bank.  This  is  a Government  Discount 
Bank.  Its  primitive  capital  was  30,000,000  roubles.  This 
Bank  receives  deposites.  The  capital  and  deposites  amounted 
to  271,208,350  roubles.  They  loaned  to  the  Empire,  at  dif- 
ferent times,  on  the  deposite  of  copper,  22,000,000  roubles. 
The  total  operation  of  the  Bank  amounted  to  955,008,125 
roubles,  in  paper,  and  9,106,686  in  specie. 

There  is  also  a Lombard  Bank. 

The  nett  profits  accruing  to  the  Nation,  or  Empire,  from 
these  Banks,  is — 

Roubles.  Cop’s. 

From  Loan  Bank,  gold  - - 971  87 

silver  - - 1,889  54i 

paper  - - 1,995,785  42§ 

Commercial  Bank,  nett  profit  after  deduct- 
ing expenses,  - 1,608,661  28 

Question . Do  not  these  several  offices  cause  confusion,  and 
give  great  influence  to  the  Government  ? 

Answer.  I think  not.  These  Boards  are  checks  one 
upon  the  other.  They  are  moreover  superintended  by  the  se- 
parate “ Council  of  Credit  Establishments”  and  by  annual 
publications  of  detailed  statements  exposed  to  public  scrutiny. 
Does  not  our  United  States’  Bank  attend  to  twenty  branches  ? 

Question.  I am  surprised  to  see  such  numerous  useful  mo- 
neyed operations  carried  on,  and  so  few  specie  operations  ; 
and  that  under  a despotic  Government,  paper  can  be  in  credit 
to  such  enormous  amounts. 

Answer.  The  appointment  of  numerous  Boards,  and  the  pub- 
lication of  their  statements,  remove  doubts  and  suspicions 
from  the  minds  of  the  people.  Credit  and  confidence  are  al- 
ways obtained  by  candid  exposes  of  Departments.  The  do- 
cument referred  to  is  a most  important  one.  The  currency 
of  595,776,310,  if  in  specie,  borrowed  at  six  per  cent.,  would 
cost  the  Nation  35,746,278  roubles  annually,  which,  in  only 
ten  years,  would  amount  to  357,462,780  roubles.  Would  not 
the  payment  abroad  of  so  much  interest  be  an  annual  drain,  to 
keep  the  Nation  in  poverty  ? If  the  Nation  had  determined 
not  to  employ  a paper  currency,  could  they  have  advanced  as 
they  have  done  ? This  surely  ought  to  open  our  eyes.  The 
Russians  are  not  mere  imitators  of  other  nations.  I deem  their 
Administration,  if  equalled,  not  surpassed,  by  any  other  in  the 
world.  The  Nation  must  be  advancing  more  rapidly  than 
ours. 

The  rapid  rise  of  Russia  affords  a phenomenon  meriting  the 
attention  of  financiers.  For  centuries  it  was  in  an  uncivilized 
state,  for  want  of  a circulating  medium.  It  was  not  until  the 


37 


year  1420,  the  first  silver  money  was  coined,  called  copecks  ; 
being  worth  a little  less  than  a cent. 

In  1654,  roubles  were  introduced  in  the  form  of  bars,  deeply 
notched,  (rouble,)  that  as  much  of  the  bar  might  be  detached 
as  might  be  required  to  make  payments  ; 100  copecks  make  a 
rouble,  worth  4s.  2 d.  sterling. 

In  1788,  the  Empress  Catharine  had  issued  100,000,000  of 
paper  roubles  ; and  as  a proof  that  they  were  wanted  for  in- 
creased capital  and  industry,  they  were  5 percent,  above  cop- 
per. 

In  1817,  the  Emperor  Alexander,  during  a perilous  war, 
had  augmented  the  issues  to  577,000,000  of  roubles,  and  they 
were  much  depreciated. 

In  1819,  the  Chancellor  of  the  Russian  Exchequer  states 
that  above  a hundred  million  had  been  funded,  and  exults  in 
the  high  credit  of  the  Government,  and  in  the  prosperity  of  the 
country.  There  cannot  be  a more  certain  criterion  of  the  ad- 
vancement of  a Nation,  than  the  absorption  of  more  and  more 
of  a paper  circulating  medium,  without  its  depreciating  from 
the  abstract  or  par  value  at  which  it  is  issued.  There  are  five 
Boards  established,  under  several  denominations,  in  Russia. 

Modern  travellers  through  the  Russian  Empire  dwell  with 
pleasure  on  the  splendid  edifices,  the  National  establishments, 
the  canals,  roads,  and  bridges,  and  the  progress  of  the  arts  and 
sciences.  The  currency  promotes  labor  in  agriculture,  ma- 
nufactures, and  commerce.  The  currency  introduces  the  mid- 
dle productive  classes  of  society.  It  is  difficult  to  estimate  the 
quantity  of  capital  created  annually  by  a small  addition  of 
currency. 

Contrast  the  rapid  progress  of  Russia,  notwithstanding  a 
despotic  government,  with  an  expensive  army  and  navy,  and 
an  extravagant  Court,  supported  by  the  industrious,  with  the 
advancement  of  the  United  States,  although  enjoying  a Re- 
publican, economical  government.  To  what  can  this  be  at- 
tributed, but  to  a diminution  of  the  circulating  medium  ? 

In  a country  without  money,  the  possessors  of  large  tracts  of 
land  have  their  own  vassals,  blacksmiths,  carpenters,  masons, 
and  laborers.  Estates  cannot  be  divided,  unless  by  donation, 
for  none  can  buy  them.  In  a country  with  augmenting  cur- 
rency, the  laborer  being  paid,  is  independent,  and  soon  buys 
tools.  The  ingenious  man  borrows  money,  and  sets  up  ma- 
chinery. To  exhibit  in  a strong  point  of  view  all  the  advanta- 
geous operations  of  a national  currency,  the  adventures  of  a 
Note  ought  to  be  published: 

“ ’Twas  mine,  ’tis  his, 

“ And  has  been  friend  to  thousands.” 


38 


Baron  Storch,  to  illustrate  the  advantages  of  low  interest, 
observes,  that  when  interest  is  reduced  from  5 to  4 per  cent, 
a borrower  can  raise  1,250  for  trade,  as  a capital,  for  the  same 
interest  which  he  before  paid  for  the  loan  of  1000  ; and  thus 
his  business  can  be  increased  one-fifth.  He  also  makes  the 
following  judicious  observations  “ as  interest  falls,  produc- 
tions are  amplified,  and  a number  of  enterprises  are  success- 
“ ively  undertaken  which  one  would  scarcely  think  of.  Thanks 
“ to  low  interest,  agriculture  is  encouraged,  productions  are 
“amplified,  and  manufactures  employ  greater  capitals,  and 
*(  commerce  opens  new  branches,  from  which  it  was  before  ex- 
“ eluded  by  high  interest ; thus,  in  Russia,  where  the  interest 
“ of  money  is  8 per  cent,  if  the  Russian  only  gains  by  trade  5 
“ per  cent,  he  must  leave  it  off,  whilst  in  Holland,  where  in- 
terest is  3 per  cent,  the  Hollander  would  be  a gainer  of  2 
“ per  cent.”  I have  heard  a usurer  say  that  he  obtained  24 
per  cent,  per  annum  in  New  York.  What  a great  loss  to  the 
merchants,  and  what  an  injury  to  commerce.  When  interest 
is  high,  the  capitals  of  a few  money  lenders  only  is  increased ; 
but  when  interest  is  low,  thousands  of  enterprising,  industrious, 
economical  men  are  increasing  their  capitals  in  a compound 
ratio,  and  the  lowest  classes  are  employed  : money  is  the 
mainspring  to  keep  all  persons  occupied.  When  interest  is 
low,  the  farmer  will  lay  out  more  money  in  purchasing  ma- 
nure and  implements  of  husbandry,  and  in  stocking  his  estate ; 
in  short,  a sufficiency  of  money  is  a sine  qua  non  to  enrich  a 
country,  and  to  prevent  those  crimes  to  which  poverty  and  not 
the  will  consents. 

Freedom,  industry,  wealth,  and  security,  all  depend  upon  a 
uniform  National  Currency. 

What  has  given  pre-eminence  to  the  little  Island,  once  de- 
scribed is  Et  penitus  toto  divisos  orbe  Britannos but  a good 
government,  good  laws,  and  a paper  currency  ? 

Question . Does  not  the  Emperor  of  Russia  gain  to  the  Em- 
pire the  legal  per  centage  on  this  currency  of  595  millions  of 
roubles,  or  3,570,000  per  annum? 

Answer.  Certainly  he  does.  His  country,  rapidly  increasing 
in  population  and  civilization,  requires  more  money.  Even  in 
Great  Britain,  where  the  benefits  of  paper  money  have  been  so 
fully  experienced,  Sir  John  Sinclair  expresses  his  opinion  in 
this  forcible  language : 

“ The  advantages  of  paper  circulation  are  hardly  to  be  esti- 
mated. In  every  country  where  commerce  flourishes,  it  is  ne- 
cessary to  have  a considerable  quantity  of  some  common  me- 


39 


dium  of  traffic.  If  paper  does  not  exist,  gold  and  silver  must 
be  made  use  of.  If  the  paper  circulation  of  Great  Britain  is 
equal  to  thirty  millions  sterling,  had  it  not  existed,  we  must 
have  exported  goods  to  that  amount,  to  have  brought  in  specie, 
and,  consequently,  we  must  have  been  thirty  millions  poorer 
than  we  are  at  present.  It  is  true  we  should  have  had  the  gold 
and  silver,  but  even  that  would  have  been  perpetually  dimi- 
nishing by  use;  and  thirty  millions  of  paper,  without  any  pos- 
sible loss  by  wearing  or  otherwise,  and  with  great  convenience 
as  to  transportation,  &c.  answers  exactly  the  same  commer- 
cial uses,  and  saves  the  annual  interest  that  would  have  been 
lost,  which,  at  five  per  cent.,  amounts  to  one  million  and  a half 
sterling.” 

“The  circulation  of  paper  has  already  been  carried  to  a 
considerable  extent  by  means  of  exchequer  bills,  banks,  and 
bankers’  notes ; but  a still  greater  quantity  is  required,  and 
an  addition  of  either  coin  or  paper  would  be  of  real  service  to 
the  community,  as  above  thirty  millions  per  annum  must  now 
be  annually  paid  for  the  interest  of  the  national  debt  and  for 
other  national  expenses.  If  one-third  of  that  sum  were  issued, 
in  notes  of  from  one  to  five  pounds  each,  receivable  in  payment 
for  taxes,  it  would  be  productive  of  the  happiest  effects,  not  only 
accommodating  individuals  and  promoting  the  improvement  of 
the  country,  but  also  adding,  at  the  rate  of  half  a million  ster- 
ling, to  the  public  resources.” 

Question.  Do  you  mean  that  these  National  notes  should 
ever  be  paid  off  and  called  in  ? 

Answer.  Certainly  not.  If  100,000,000,  or  any  other  given 
sum,  were  issued  in  payment  for  materials  and  labor,  will  not 
the  nation  be  enriched  to  that  amount  ? and  will  not  individuals, 
by  receiving  of  these  notes,  be  constantly  making  improve- 
ments ? As  the  property  and  population  increase,  more  notes 
must  be  issued. 

Question.  How  can  you  imagine  that  a nation  can  be  enrich- 
ed by  paper  notes  ? 

Answer.  If  a nation  agrees  to  give  a value  to  any  thing, 
by  promising  to  receive  it  at  that  given  value  denominated  a 
dollar,  an  eagle,  a pound,  a shilling,  or  what  they  please,  is  it 
not,  to  all  intents  and  purposes,  as  useful  for  internal  concerns 
as  coins  of  the  precious  metals  ? Do  not  these  precious  metals 
greatly  derive  their  value  from  the  will  of  different  Govern- 
ments ? 

Question.  You  seem  to  think  that  a nation  could  rapidly 
acquire  factories,  machinery,  and  all  labor-saving  improve- 
ments, if  it  had  a sufficiency  of  currency;  and  that  a Govern- 
ment has  a power  equal  to  the  possession  of  the  imaginary  phi- 
losopher’s stone. 


40 


Answer.  I do  ; and  prove  my  opinion  by  facts  exhibited  in 
Great  Britain  after  1797.  This  system  is  even  preferable  to 
the  philosopher’s  stone  ; because,  by  the  latter,  excess  of  gold 
and  silver  would  make  them  of  little  value.  View  the  island  of 
Great  Britain  ; ponder  upon  its  wonders  for  a week ; go  to 
its  Mint,  and  ascertain  that  it  has  coined  more  gold  and  silver  in 
a year  or  two  than  we  have  in  40  years.  Industry,  set  to  work  by 
notes,  applied  to  machinery  and  all  kinds  of  improvements,  ob- 
tained every  thing  for  consumption  and  exportation  ; and,  also, 
brought  in  the  precious  metals  for  use  in  manufactures  and  for 
coins.  We  are  enlightened,  enterprising,  and  industrious. 
We  only  want  a good  financial  system.  Several  who  under- 
stand my  propositions,  encourage  me  to  persevere,  because 
every  year  proves  the  necessity  of  some  succedaneum  to  the 
present  specie  basis,  which  certainly  is  not  increasing,  whilst 
our  population  is  doubling  in  twenty-five  years.  But  how  irk- 
some it  is  to  have  “ to  counteract  the  ignorance  and  prejudice 
“ of  mankind,  and  to  endure  the  delays  to  which  vivid  and  pe- 
“ netrating  minds  are  subjected  from  the  tardy  co-operations  of 
“ the  dull  and  doubtful.”  How  painful,  also,  it  is  to  see  ad- 
vancement retarded,  and  distress  pervading  the  community, 
when  conscious  that  these  federated  States  might  exhibit  unex- 
ampled prosperity. 

I had  concluded,  when  the  following  short  notice  struck  my 
sight  : 

Welland  Canal . — A grant  of  50,000£.  for  the  aid  of  the  Wel- 
land Canal  in  Upper  Canada,  has  passed  the  British  Parlia- 
ment, and  every  share  of  the  stock  of  the  Company,  for  sale  in 
London,  disposed  of.  A canal  of  187  miles  is  also  making 
from  Lake  Ontario  to  Montreal. 

My  position  is,  that,  if  we  had  a sufficiency  of  money  and 
lowlnterest,  manufactures  would  spring  up  where  the  raw  ma- 
terial is  produced,  and  that  Northern  Nations,  not  producing 
cotton,  could  be  undersold  ; freight,  insurance,  and  charges  on 
the  raw  material,  and  the  transportation  of  it,  inland,  and  the 
expense  of  returning  in  the  form  of  calicoes,  &c.,  and  then 
the  expense  of  shipping,  would  be  a sufficient  protection  for 
American  manufactures.  As  it  is,  the  trade  will,  I fear,  be 
transferred  from  the  Atlantic  to  the  inland  seas,  and  from 
thence  smuggled,  perhaps  even  vi  et  armis  $ for  the  inhabitants 
will  be  induced,  by  self-interest,  to  co-operate. 

Question.  Can  you  give  me  a contrast  ? 

Tes — 

National  Currency.  Bank  Notes. 

1st.  The  currency  is  thrown  into  1st.  A charter  is  granted,  and  a corn- 
circulation  by  subscriptions  to  canals  pany  is  formed  by  subscriptions.  The 
and  roads,  and  by  expenditures  on  first  and  second  instalment  is  paid  in 


41 


the  numerous  public  improvements 
required  in  this  new  extensive  coun- 

iry- 


2d.  The  currency  thus  thrown  into 
circulation  gets  into  the  hands  of  indi- 
viduals, who  deposit  some  in  Banks, 
or  who  use  it  as  a circulating  medium 
in  loans  on  mortgage,  or  in  purchases 
of  various  denominations. 

3d.  The  Government  is,  in  reality, 
debtor  to  individuals,  and  promises  to 
redeem  Us  notes  with  four  per  cent, 
stock  : but  the  Government  is  never 
applied  to,  unless  it  imprudently  is- 
sues a superfluity  of  notes. 

4th.  The  Government  gives  value  to 
its  notes,  by  receiving  them  in  all  pay- 
ments of  duties,  of  taxes,  and  for  lands. 

5th.  As  the  Government  notes,  not 
bearing  interest,  are  unmerchantable 
abroad,  they  are  never  exported,  and, 
consequently,  do  not  fluctuate  in  quan- 
tity, by  any  difference  in  the  balances 
of  trade  with  foreign  nations. 


6th.  The  Government,  when  it 
finds  industry  paralyzed,  by  a scarci- 
ty of  money,  can  issue  more  notes,  and 
relieve  the  community. 


7th.  The  notes  of  a Government  be- 
ing equally  valuable  every  where,  are 
not  exposed  to  depreciation,  but  are 

6 


specie,  and  in  notes  of  specie  paying 
banks  ; and  the  stockholders  obtain 
discounts  for  the  remaining  instal- 
ments, by  pledging  their  stock.  The 
Bank  of  the  United  States  was  form- 
ed by  a subscription  of  $ 5,000,000  in 
specie,  7,000,000  of  5 per  cent,  stock 
by  Government,  and  23,000,000  of  6 
per  cent,  stock  by  individuals. 

2d.  The  banks  issue  notes  by  dis- 
counting promissory  engagements, 
payable  every  sixty  days.  Thus,  every 
week,  the  Directors  meet  and  renew 
the  old  paper,  as  it  is  termed,  or  cur- 
tail the  discount,  or  demand  the  whole 
sum  promised. 

3d.  The  Banks,  every  week,  are 
draining  individuals  and  protesting 
notes,  at  § 1 75  for  every  failure  to  re 
new  notes,  or  to  pay  curtailments.  To 
know  the  consequences  of  this  power, 
see  Cobbett’s  letter. — page  15. 

4th.  The  Banks  promise  to  redeem 
their  notes  with  specie,  but,  as  they 
issued  three  or  four  for  one  dollar  in 
specie,  they  fail  when  run  upon. 

5th.  The  Banks,  when  specie  is 
taken  from  them,  call  in  notes  to  three 
or  four  times  the  amount  of  specie 
withdrawn  ; the  scarcity  of  money  thus 
created  causes  great  embarrassments 
to  merchants  and  others,  and  occa- 
sions ruinous  sacrifices  and  bankrupt- 
cies. Immediately,  a run  is  made  on 
banks  ; they  cease  discounting  ; and 
thus,  every  week,  their  notes  are  paid 
into  them,  and  their  creditors,  to  pre- 
vent protests,  prosecution,  and  fail- 
ures, are  compelled  to  give  great  se- 
curity, and  to  borrow  of  usurers,  at  an 
enormous  rate  of  interest.  To  check 
the  exportation  of  specie,  the  banks 
sometimes  send  Government  stocks  to 
be  sold  in  Europe,  and  draw  bills, 
which  they  sell  to  Europeans  who 
have  sold  goods  for  bank  notes,  and 
would  otherwise  take  away  specie. 

6th.  Banks,  when  drained  of  a por- 
tion of  their  specie,  having  called  in 
their  notes,  dare  not  re-issue  them  till 
specie  has  returned  to  their  vaults, 
which  may  not  happen  for  many  years; 
and  thus  the  production  of  articles  is 
diminished,  when  it  ought  to  be  in- 
creased. 

7th.  Bank  notes,  when  conveyed 
beyond  a limited  sphere  of  circulation, 
are  at  a discount  or  depreciated,  and 


42 


sometimes  higher  than  specie,  as  they 
are  more  expeditiously  and  cheaply 
conveyed  than  specie  from  one  place 
to  another. 


8th.  The  Government,  by  its  is- 
sues, can  regulate  the  rate  of  interest, 
which  rises  when  money  is  scarce,  and 
falls  as  the  quantity  of  money  is  in- 
creased. 


9th.  The  Government  can  only  con- 
stitutionally  issue  a currency.  They 
can  have  stocks,  bearing  interest,  to 
give  in  exchange  for  their  notes, 
whenever  offered  to  them.  Thus,  indi- 
viduals can  always  prevent  an  excess. 

10th.  The  notes  issued  are  an  ac- 
quisition to  individuals,  and  the  com- 
munity does  not  pay  interest  to  the 
Government. 

11th.  The  Government  benefits  the 
nation,  by  issuing  notes  in  subscrip- 
tion to  Canal  companies,  &c.  and  the 
nation  receives  dividends  annually  to 
save  itself  from  taxation. 


12th.  The  basis  of  the  Government's 
notes  is  the  whole  credit  and  property 
of  the  nation. 

13th.  The  Government  cannot  ra- 
pidly call  in  its  notes,  and  prosecute 
borrowers  of  them,  as  Banks  do. 


14th.  The  amount  of  notes  that  a 
Government  can  issue  is  small,  corn- 


must  be  sold  at  a loss  to  brokers,  as 
shop-keepers  will  not  receive  them. 
Suppose  A and  B brokers  and  part- 
ners ; A resides  at  Boston,  and  B at 
Washington  ; the  former  purchases 
notes  of  Washington  at  a discount,  and 
B purchases  notes  of  Boston  at  a dis- 
count ; and  thus  they  both  gain,  and 
the  community  suffers  in  both  ways. 

8th.  Banks,  when  specie  is  abun- 
dant, often  issue  notes  fearlessly  to  an 
excess.  When  bad  harvests  happen, 
or  a war,  &c.  cause  excessive  expen- 
ditures abroad,  and  specie  is  diminish- 
ing, the  Banks,  for  self  preservation, 
must  press  their  debtors.  Instances  of 
great  fluctuations,  where  manufac- 
tures and  commerce  are  so  much  aug- 
mented, are  very  frequent  in  nations 
where  banks  exist. 

9th.  The  State  governments  set  up 
State  banks  and  branches  in  direct 
violation  of  the  Constitution,  and  they 
charter  banks  to  obtain  bonuses. 


10th.  Banks  must  have  interest  from 
individuals  every  sixty  days,  and  the 
community  has  to  support  their  ex- 
pensive establishments,  and  to  bear 
their  losses. 

11th.  The  Banks  are  managed  by 
interested  directors,  who  are  mer- 
chants and  shop  keepers,  and  some- 
times get  discounts  for  customers,  who 
could  not  otherwise  pay  them.  A his- 
tory of  the  Banks  would  develope 
much  oppression  and  intrigue. 

12th.  The  basis  of  all  our  Bank  notes 
is  about  $ 15,000,000  in  specie — they 
were  wont  to  have  Government  fund- 
ed debt,  but  that  is  greatly  liquidated. 

13th.  The  Banks  demand  securi- 
ties, and  have  prosecutions  of  debtors, 
and  sell  their  property,  and  buy  it  in 
on  low  terms.  Let  the  court  docket 
be  examined  every  term,  and  then  the 
magnitude  of  the  evil  will  be  ascer- 
tained. The  mind  revolts  at  a pow- 
er, having  millions  of  property  at 
their  command  every  sixty  days. — 
Banks  of  deposite  are  very  useful,  and 
they  make  fortunes  in  England.  Short- 
sighted legislators,  hoping  to  increase 
the  circulating  medium  of  the  coun- 
try for  increasing  population  and  capi- 
tals, did  not  look  forward  to  contem- 
plate the  ruinous  consequences. 

14th.  The  bank  notes  issued  are 
about  forty-five  million  of  dollars. 


43 


The  property  of\the  nation  I esti- 
mate at  seven  thousand  millions  of 
dollars ; but,  when  the  amount  of  notes 
is  diminished,  it  affects  the  value  of  all 
fixed  capitals.  Merchantable  property 
has  its  value  regulated  by  prices 
abroad.  Foreign  articles  are  not  af- 
fected by  scarcity  or  plenty  of  money, 
in  any  degree,  so  much  as  estates, 
houses,  &.c.  are. 

15th.  The  notes  of  the  Bank  and 
Branches  of  the  United  States  are  not 
receivable  but  at  the  places  whence 
they  are  issued  ; therefore,  a person 
wanting  to  make  a remittance  to  any 
town  in  the  Union  where  a branch, 
bank  is,  must  pay,  for  a bill  of  ex- 
change, from  a half  to  two  and  a half 
per  cent,  although  he  offers  specie. 
This  is  a great  loss  to  merchants.  For 
instance,  a merchant,  at  New  Orleans, 
sends  a cargo  of  cotton  to  New  York, 
and  a merchant,  at  New  York,  sends 
a cargo  to  New  Orleans ; each  must 
pay  two  or  two  and  a half  per  cent,  for 
each  transaction,  and  the  bank  has  a 
nett  profit  of  five  per  cent.  If  the 
merchants  had  national  notes  to  send, 
this  exchange  would  be  saved.  On  a 
million  of  dollars,  the  saving  would  be 
twenty  or  twenty-five  thousand  dol- 
lars, which  would  be  an  annual  in- 
crease of  capital. 

Question.  What  is  your  opinion  upon  the  present  dispute 
About  productive  and  non-productive  labor  ? 

Answer.  It  has  been  an  enlightening  discussion  amongst 
writers  upon  political  economy.  Man  cultivates  the  soil,  or  plies 
the  loom,  &c.  to  obtain  necessaries,  comforts,  and  enjoyments. 
If  the  farmer,  who  has  sold  his  luxuriant  harvests,  purchases 
furniture,  or  hires  a musician  for  his  daughters,  or  pays  a school- 
master for  his  son’s  education,  or  goes  to  a play  or  an  opera, 
or  travels  to  a watering  place,  or  purchases  a library,  or  builds 
a house,  his  money,  thrown  into  circulation,  gives  employ  and 
comforts  to  others,  and  the  money  is  constantly  operating  to 
produce  industry  and  happiness,  and  to  prevent  vice  by  idle- 
ness and  poverty. 

Question.  What  labor  is  most  productive,  agricultural  or 
manufacturing  ? 

Answer.  Certainly  the  latter.  I have  seen  a statement  that 
14  men  and  286  women  and  children,  with  the  aid  of  machin- 
ery, produced  g 240,000.^  Agriculture  is  liable  to  failure  of 

* In  Macclesfield  230  power  looms,  by  11.5  girls  and  a few  workmen,  made 
1,865,768  yards  of  cloth  in  a year. 


pared  to  the  circulands  or  property  of 
the  nation.  In  Great  Britain,  the  notes 
amount  to  about  sixty  millions  ster- 
ling, and  the  capitals  are  estimated  at 
above  two  thousand  millions  sterling. 
It  is  the  duty  of  the  legislators  and 
statesmen  of  a nation  to  have  a suffi- 
ciency of  currency  to  employ  the  in- 
dustrious inhabitants,  and  to  stimulate 
productive  ingenuity,  enterprise,  and 
labor. 

15th.  A national  note  being  receiv- 
able at  par  every  where,  can  be  sent 
by  mail  from  New  Orleans  to  Maine. 
The  Bank  of  the  United  States  states 
in  its  memorial  of  17th  January,  1821, 
that  from  the  1st  of  April,  1819,  to 
the  30th  August,  1819,  their  curren- 
cy was  reduced  from  $6,045,428  to 
3,838,386;  and  they  say,  “no  evil 
can  be  greater  than  a decreasing  cur- 
rency ; and  to  use  the  expression  of  a 
great  man — poverty,  beggary,  and 
sloth,  follow  in  its  train need  higher 
authority  be  given  ? 


crops.  We  have  more  men  employed  productively  than  Great 
Britain,  yet  how  very  inferior  is  the  value  of  our  products. 
The  impediment  to  our  setting  up  manufactures  is  the  want  of 
money  ; for  it  requires  a large  sum  to  erect  a factory,  set  up 
machinery,  purchase  raw  materials,  and  pay  workmen.  If 
money  be  scarce,  merchants  and  retailers  must  purchase  on 
long  credits,  and  often  disappoint  the  manufacturer  by  their 
inability  to  collect  debts  due  from  consuming  customers. 

Question.  Which  is  the  most  healthy  occupation,  the  plough- 
man’s or  the  operative’s  ? 

Answer.  The  statistical  accounts  prove  that  there  are  more 
disorders  and  deaths  in  agricultural  counties  than  manufac- 
turing counties.  The  former,  exposed  to  changes  of  climate, 
are  liable  to  more  complaints.  Marriages,  also,  are  more 
promoted  by  manufactures  than  by  agriculture,  because  chil- 
dren are  employed  by  the  former. 

In  Great  Britain,  the  number  of  stamps  issued,  in  1801* 
were  fifteen  thousand,  and  in  1826.  twenty-five  [thousand 
six  hundred.  How  can  a nation,  which  has  only  mines  of 
silver  and  Pactolean  rivulets,  and  which  has  not  bills  of  ex- 
change or  promissory  notes,  or  any  kind  of  paper  currency, 
have  a sufficiency  of  money  to  buy  the  luxury  of  a news- 
paper, which,  while  it  amuses,  instructs  ? As  the  sun,  by 
its  rays,  enlightens  the  earth  and  vivifies  all  nature,  so  the 
press  scatters  the  lights  of  knowledge  collected  from  all  quar- 
ters of  the  globe  through  a reading  nation.  When  money  is 
scarce,  the  first  act  of  economy  in  a family  is  to  strike  oflf 
newspapers,  Reviews,  and  Magazines  ; and  the  next  is,  to  take 
the  children  from  school.  Printers,  according  to  the  strict 
definers  of  the  term,  are  not  productive  laborers,  because  they 
neither  supply  food,  raiment,  or  fuel.  When  I read  the  exul- 
tation expressed  by  the  discoverers  of  gold  dust  in  North  Ca- 
rolina, and  other  places,  which  rarely  pays  for  the  labor,  I pity 
the  ignorance  of  those  who  have  not  read  Ricardo,  Grey, 
Thornton,  Young,  Sinclair,  and  other  modern  authors,  who 
expose  the  folly  of  reliance  upon  the  precious  metals,  and  dis- 
play the  incalculable  advantages  of  a well-regulated  paper  cur 
rency  equal  to  the  demands  of  society. 

The  question  forces  itself  upon  every  well-wisher  for  his 
country’s  prosperity,  happiness,  and  | independence — Have 
we  not,  at  least,  as  good  credit  as  any  other  nation  ? Our  po- 
pulation is  nearly  equal  to  that  of  Great  Britain  ; we  have  no 
belligerent  neighbors ; our  debt  is  trifling ; our  Army  and  Navy 
small;  we  have  few  taxes;  we  have  more  productive  laborers. 
\Ye  have  two  or  three  hundred  million  of  acres  for  sale  ; we 
have  iron,  copper,  lead,  and  other  minerals’;  we  have  a fertile 
soil,  and  varieties  of  climate  for  numerous  products — why,  then, 
are  we  compelled  to  borrow,  and  run  in  debt  to  foreigners  ? 


45 


We  have  an  intelligent,  enterprising,  industrious,  energetic 
population — why  have  we  not  more  machinery,  and  a denser 
population  in  the  Atlantic  States  ? and  why  are  so  many  citi- 
zens emigrating  to  the  back  woods,  to  live  with  difficulty,  and 
stinted  for  comforts  ? There  is  but  one  answer — Congress  will 
not  pay  attention  to  finance. 

Question . You  have  mentioned  the  meeting  at  Charlottes- 
ville of  the  first  characters  in  Virginia,  and  alluded  to  the  pro- 
position to  borrow  money  from  abroad  for  public  improve- 
ments. We  see  States  advertising  for  loans,  and  Corporations 
also.  How  much  do  you  think  could  be  immediately  applied 
to  useful  objects  with  success  ? 

Answer.  At  least  two  hundred  millions  of  dollars  in  five 
or  six  years.  The  British  Government  applied  977,000  pounds 
sterling  to  the  Caledonian  Canal.  If  one  Canal  costs  five 
millions  of  dollars,  think  what  canals,  roads,  and  railways, 
&c.,  our  new  world  requires.  Were  money  in  sufficient  quan- 
tity, individuals  would  subscribe.  Fervet  opus  would  be  our 
motto.  Now  we  meet,  publish  reports  of  surveys,  calculations, 
and,  except  in  a few  instances, 66  resolve,  and  re-resolve,  and 
die  the  same.”  We  have  the  experience  of  the  old  and  young 
worlds.  We  have  men  of  genius,  knowledge,  and  enterprise, 
but,  without  money,  cannot  proceed  ; and,  if  we  borrow  from 
abroad,  we  shall  labor  only  for  others  abroad. 

Question.  Do  you  calculate  that  the  specie  basis,  as  it  is  cal- 
led, has  increased  since  Mr.  Crawford’s  report  ? 

Answer.  I am  led  to  believe  that  it  has  decreased.  A gen- 
tleman who  has  paid  great  attention  to  the  situation  of  State 
Banks  for  several  years,  and  has  been  collecting  their  reports, 
has  given  me  the  following  statement : 


Population,  Currency. 


Specie, 


1816  8,000,000  110,000,000 

1819  9,000,000  45,000,000 

1828  12,000,000  36,000,000 


15.000. 000 

14.000. 000 


In  1816  there  were  in  circulation  about  g 13  for  each  per- 
son; in  1819,  about  g 5 for  each  person;  and,  in  1828,  about 
g 3.  Thus  have  our  financiers  reversed  the  proper  pro- 
gression, for  our  currency  has  decreased  in  an  inverse  ratio 
with  the  increase  of  population. 

By  a reference  to  the  very  valuable  statistical  tables  of 
Messrs.  Van  Zandt  and  Watterston,  it  appears  that  the  ex- 
ports of  bullion  and  specie  since  1821,  inclusive,  exceed  the 
imports  28,572,718.  What  further  proofs,  he  asks,  is  neces- 
sary to  satisfy  you  that  a metallic  currency  cannot  answer 
for  our  country  under  existing  circumstances  ? 

A few  months  ago  I read  in  the  newspapers,  that  3,000,000 
•f  dollars  had  been  exported  within  a few  weeks—  5*'  " 


46 


annual  report  of  the  seventeen  Boston  Banks,  the  specie, 
on  the  6th  of  May  last,  was  reduced  from  1,193,000  to  650,000. 
That  several  Banks  in  the  United  States  have  failed  since  the 
resumption  of  specie  payments,  has  been  announced  in  the  news- 
papers, and  that  the  survi  ving  banks  dare  not  issue  many  notes, 
is  demonstrated  by  the  small  dividends  they  make.  Thus  the 
Banks  suffer,  together  with  the  community,  by  an  evanescing 
specie  basis.  When  a committee  of  Congress  shall  investigate 
this  subject,  accurate  information  will  be  obtained,  and  not  till 
then.  To  moneyed  institutions  in  Europe,  it  must  appear 
laughable  when  our  Banks  have  only  S 10,000,  15,000,  ar.d 
£0,000  and  upwards,  in  their  vaults.  Heretofore,  our  Banks 
had  Government  stocks  to  sell  for  cash  whenever  they  were  run 
upon  ; but  now  they  are  paid  off,  the  Banks  are,  of  course,  be- 
come more  insecure.  The  merchants,  therefore,  must  be  suf- 
ferers whenever  the  Banks  are  alarmed  : and  to  the  complaints 
of  merchants,  the  directors  reply,  “ We  lament  the  painful  al- 
ternative to  which  we  are  reduced,  but  we  must  preserve  our 
<c  credit  as  long  as  we  can,  and  if  the  Government  will  not  or 

cannot  supply  a succedaneum  or  substitute  for  metallic  cur- 
“ rency  sent  abroad  by  an  unfavorable  balance  of  trade,  we 
6 4 are  not  culpable  ; it  cannot  be  our  interest  to  ruin  our  cus- 
u tomers,  and  to  incur  losses  by  failures.” 

Question . Why  do  not  merchants  memorialize  Congress  ? 

Answer.  They  seem  impressed  with  the  conviction  that  the 
Representatives  of  the  People  are  either  too  prejudiced  to  lis- 
ten, or  too  unacquainted  with  finance  to  think  they  can  com- 
prehend it.  The  merchants,  also,  are  adverse  to  an  acknow- 
ledgement of  their  want  of  resources,  and  wait  for  others  to 
step  forward.  Moreover,  they  say,  if  even  committees  were 
appointed,  they  would  not  report,  but  follow  the  example  of 
other  committees,  who  have  not  been  censured.  It  is  not  easy  to 
obtain  accurate  accounts  from  the  custom-house  : I will,  how- 
ever, subjoin  them. 

From  1821  to  1827,  inclusive,  specie  and  bullion  imported  g 46,094,463 
‘ Exports  54,542,817 

Excess  of  exports  8,448,354 

Question . Were  the  United  States’  Bank  to  be  run  upon 
for  specie,  now  it  has  increased  its  discounts,  would  not  cur- 
tailments, to  which  it  would  be  reluctantly  driven,  cause  great- 
er distress  ? 

Answer.  Certainly.  The  more  numerous  its  debtors  be- 
come, the  more  general  distress  it  must  cause.  I cannot  con- 
template, without  shuddering,  the  distress  that  would  ensue. 
The  nation,  in  its  present  predicament,  has  its  manufactures 
and  industry  very  much  in  the  power  of  foreigners.  The  with- 


47 


draw  a]  of  only  five  or  ten  millions  of  dollars  would  spread 
ruin  far  and  wide. 

Question.  What  remedy  can  you  devise  for  this  fatal  dis- 
order ? 

Answer.  The  only  one  which  I recommend  as  an  antidote — 
the  issue  of  a National  Currency.  Mr.  Dallas,  foreseeing  such 
a crisis,  inserted  in  the  act  of  Congress  a power  in  the  Pre- 
sident to  suspend  specie  payments,  but  Congress  rejected  this. 

Question.  Should  the  United  States’  Bank,  perceiving  a 
drain  which  it  could  not  stand,  apply  to  the  President,  during 
the  recess  of  Congress,  what  w ould  you  recommend  ? 

Answer . I should,  if  President,  immediately  issue  Treasury 
Notes,  not  bearing  interest,  in  sums  of  five  dollars  and  up- 
wards, and  would  apply  to  Congress  for  an  act  of  indemnifi- 
cation. The  Minister  in  Great  Britain  is  sometimes  reduced 
to  this  emergency.  The  People  would  applaud  the  measure, 
and  would  take  the  notes,  not  only  without  reluctance,  but 
with  joy — as  the  British  did  the  Bank  of  England  notes  ; nay, 
more  willingly,  for  they  would  have  the  profit,  and  not  a com- 
pany of  money  lenders.  The  nation  has  been  warned  of  this 
danger.  As  we  owe  about  fifty  millions  of  dollars  to  Euro- 
peans, a few  moneyed  men,  having  our  stocks,  by  selling  them 
here,  might  be  drawing  away  specie,  and  cause  the  Bank  to 
suspend  specie  payments.  The  loss  could  not  be  much,  say  10 
per  cent,  on  ten  millions.  Thus,  by  a sacrifice  of  one  million 
of  dollars,  this  calamity  might  be  produced. 

Question.  This  need  not  surely  be  apprehended  ; for  the 
Ministry,  foreseeing  the  benefits  to  result  from  a National  cur- 
rency, to  this  nation,  would  not  produce  the  crisis. 

Answer.  No  doubt  a wise  financier  would  prefer  keeping  the 
nation  always  in  straightened  circumstances,  and  only  bleed  the 
nation  as  it  became  relieved  from  its  hemorrhage.  When  a 
Hercules  fancies  he  must  walk  upon  crutches,  would  his  oppo- 
nent teach  him  how  to  throw  them  aside  ? Or  if  the  Hercules, 
imagining  that  he  could  not  use  his  legs,  were  to  go  crawling 
about,  leaning  on  other  men’s  shoulders,  would  his  opponent 
persuade  him,  or,  by  an  indiscretion,  force  him  to  walk  alone  ? 
I need  say  no  more.  Varhum  sat  est  sapienti. 

Question.  Is  not  your  system  applicable  to  all  nations 
whose  Governments  preserve  public  credit  ? 

Answer.  Certainly  it  is.  It  is  a universal  panacea  for  the 
specie-based  banking  malady,  so  destructive  to  the  productive 
part  of  the  community.  It  is  not  merely  a cure  for  a disorder, 
but  it  is  a sanitive,  a vis  vitae. 

Perhaps  my  anxiety  not  to  omit  any  argument  to  prove  the 
ruinous  consequences  of  the  present  scarcity  of  money,  and 
the  necessity  of  a remedy  for  it,  may  have  made  me  prolix.  I 


48 


see  the  estates  of  two  Presidents  unsaleable,  and  hear  all  pa- 
rents, who  owe  even  small  sums,  complain  that  their  declin- 
ing years  are  clouded  with  melancholy,  and  that  their  estates, 
once  deemed  adequate  to  their  education,  and  to  the  support 
of  their  families,  will  be  sacrificed  for  one-fifth  of  their  former 
value.  I also  witness,  daily,  other  instances  of  distress  : all 
occasioned  by  the  ignorance  or  neglect  of  finance.  Need  I 
then  apologize  for  the  repetition  of  my  former  reasonings  ? 
Mr.  Jefferson,  in  reply  to  a friend  who  complained  of  his  dis- 
tress on  account  of  scarcity  of  money,  writes  from  Monticello, 
June  5th,  1825  : u your  situation  is  painful,  but  neither  novel 
*-nor  unfrequent.  It  is,  indeed,  that  of  a great  portion  of  our 
“countrymen;  brought  on  them  not  by  their  own  errors, 
“ but  by  that  of  our  legislators,  in  subjecting  the  propor- 
tions between  the  money  of  the  country  and  its  other  pro- 
perty, to  the  gambling  operations  of  money  brokers. 
“ Against  this,  no  human  foresight  could  guard  individuals.” 

A wise  financier  collects  fiscal  knowledge  from  all  quarters, 
as  the  agriculturist  collects  seeds  and  plants.  1 have,  there- 
fore, submitted  this  extract  from  the  Russian  Budget,  which 
will  not  escape  the  notice  of  our  able  Secretary  at  the  Head  of 
the  Treasury  Department.  Russia  bears  a resemblance  to  the 
United  States  in  the  single  particular  of  the  extent  of  her  era 
pire ; but,  in  consequence  of  the  financial  knowledge  of  he 
Ministers,  which  has  called  into  action  all  the  energies  of J he 
nation,  through  the  medium  of  a well-regulated  paper  currency, 
her  resources  are  unbounded,  and  enable  her  to  maintain, 
without  the  imposition  of  any  extraordinary  burthens  upon  her 
subjects,  her  present  preponderating  ascendency  in  Europe. 
The  following  are  the  ominous  remarks  of  the  “ Times,”  con- 
firmatory of  these  observations : 

“ Those  who  attribute  ambitious  projects  to  Russia,  have  just 
“ cause  for  apprehension.  The  Minister  announces  to  Europe 
“ that  the  Government  of  the  Czar  can  assemble  immense  ar- 
« mies,  make  distant  wars,  and  extend  conquests,  without  bor- 
rowing a single  rouble,  and  without  imposing  an  additional 
“ tax.” 

Whilst  the  Emperor  is  bringing  many  hundredthousand  men 
into  the  field  to  conquer  the  despotic  bigotry  which  has  too  long 
oppressed  and  devastated  the  fairest  portion  of  Europe  and 
Asia,  let  it  be  our  glory,  in  the  same  career  of  philanthropy,  and 
by  the  adaptation  of  the  same  means,  to  surmount  the  obstacles 
of  nature  by  joining  our  inland  seas  with  the  ocean  ; to  cause 
our  wildernesses  to  flourish  with  civilization  ; and  to  make  our 
citizens  one  People  in  common  interest  and  common  affection. 
Let  us  break  the  chains  of  slavery,  and  cause  all  the  States  i j 


49 


be  united  by  the  cement  which  is  to  be  found  in  the  moral  prin- 
ciples given  to  the  whole  human  race  by  our  all-powerful,  all- 
wise, all-just,  all-beneficent  Creator. 

I am,  however,  deviating  : I hope  I shall  find  my  apology 
for  tautology  in  old  age  ; and,  for  my  want  of  arrangement  and 
defectiveness  of  style,  in  the  nervous  debility  incident  to  it. 
Every  generation  becomes  wiser  by  the  experience  acquired 
and  transmitted  by  each  preceding  one ; I may,  therefore,  hope, 
that  hereafter,  my  errors  will  be  rectified,  my  obscurities  illu- 
minated, and  my  theoretical  suggestions  verified. 

May  this,  my  last  tribute  to  our  Society,  prove  acceptable, 
from  one  of  their  first,  most  aged,  and  most  zealous  members, 

“ E’en  from  the  tomb  the  voice  of  nature  cries  ; 
e(  E’en  in  our  ashes  live  our  wonted  fires.” 


2iVetSrtoerres^1oS”Toenni!5  ProPos!.nS  ‘°  issue  Trea. 
m,ttee  on  Hoads  and  Canals,  t„  ,Ce  cerWW*  S ’ "e  referred  to  Com- 
Is  It  not  self-evident,  that  the  lands  «r,^CateS  °J  scrip  to  make  roads, 
soon  lost  for  a trifle,  unless  Congress’  shall  adorn'  m‘nfS  of  ,he  "“‘ion  will  be 
four  hundred  millions  of  dollars  > Uevenue  from  ? ^ste.m,t0  s^e  three  or 

In  25  years,  12,000,000  more  . $ 120 ,000,000 

In  23  years,  12,000,000  more  . 120,000,000 

In  25  years,  12,000,000  more  „ 240,000,000 

‘ ‘ - 480,000,000 

In  75  years  . — 

sent^popuhiflon? b°Ut  ^ P1*0?01^011  which  the  Russian  currency  ^astoitspre? 
tviltm  ™enue 

recommended.  But  the  lands  snrinmF J n?*y  be  °btained  from  the  sourci 
treasury,  if  State  Government”  ® ^^IttedTvT,:  the  “«<>"“ 

paper  mints.  c permitted  to  violate  the  Constitution  by 

tion  to  the  concerns'  of^the  natiX^durint^he  ^ eteirnincc1 1°  give  serious  atten- 
wise  system  ol  our  departed  statesmen  and  fi£ies*nt  calm>  and  to  render  the 
by  fulhlhng  their  expanded  concenTons  ^ ^ ^ a Pei™a"ent  blessing, 

ment  Now  is  the  favorable  crisis  P«  There  Sf6”  , fhe  Seneral  Govern! 

i here  is  a tide  m the  affairs  of  men” 


50 


POSTSCRIPT. 

Or  outlines  of  a plan  for  emancipation  of  Slaves. 

Should  Congress  adopt  a currency  system,  the  Nation  will 
obtain  a profit  of  five  millions  per  annum,  in  addition  to  their 
present  surplus  revenue,  and  a constantly  increasing  profit. 
I have  already  proposed  that  Congress  should  subscribe,  in 
notes,  to  canals,  rail-wa^s,  roads,  and  other  improvements, 
made  by  chartered  companies  ; and  now  submit  to  patriots  and 
philanthropists  the  outline  of  a plan  for  the  emancipation  of 
slaves  in  the  United  States,  by  the  means  of  this  new  creation 
of  resources.  I propose— 

1st.  That  Congress  shall  appoint  a Board,  entitled  The 
Hoard  of  Emancipation , to  consist  of  five  members,  lest  by 
sickness  a constant  quorum  should  not  be  obtained ; the  de- 
lays of  salaries,  6c c.  which  must  be  allowed,  I do  not  advert  to. 

2d.  That  this  Board  shall  have  power  to  appoint  branches 
in  several  States,  as  business  may  require  them. 

Sd.  That  Congress  shall  appropriate  at  least  one  million 
annually,  to  be  paid  in  notes,  to  the  Emancipation  Board,  for 
the  purchase  of  slaves. 

4th.  That  Congress  shall  appropriate  500,000  dollars,  in 
notes,  for  the  exportation  of  freed  slaves  and  other  free  peisons 
of  color ; and  order  this  sum  to  be  paid  to  the  African  Coloni- 
zation Society. 

Let  me  now  proceed  to  describe  the  duties  of  the  Emancipa- 
tion Board. 

They  shall  hire  out  these  purchased  slaves  to  Govern- 
ment contractors  for  public  works,  to  individuals  for  ser- 
vants and  laborers,  and  to  canal,  rail-way,  and  road  con- 
tractors, and  to  ship  owners,  for  seamen.  It  would  require 
many  pages,  were  I to  set  down  the  present  rates  of  w ages,  of 
life-insurance,  of  clothing,  medicine,  &c. ; suffice  it  to  say, 
that*  by  inquiries  from  Engineers,  slave  hirers,  and  others, 
I am  led  to  conclude  that,  at  the  end  of  eight  years,  the  amount 
received  in  wages,  and  annually  invested,  will  indemnify  the 
Board  for  the  first  cost,  after  deducting  every  expense,  and 
after  making  allowances  for  deaths. 

If  the  Board  or  Boards  receive  one  million  a year,  in  notes 
from  the  Treasury,  and  the  slaves  cost  on  an  average  300  dol- 
lars, the  Board  or  Boards  will  purchase  3,333  the  first  year  ; 


51 


but  more  and  more  every  year,  as  the  wages  received  will  be 
annually  added  to  the  annual  million. 

After  the  service  of  eight  years,  when  the  slaves  are  to  be 
made  free,  and  given  over  to  the  Colonization  Society,  the  Board 
will  have  an  acquired  capital  of  the  original  million  received, 
in  addition  to  the  annual  million ; and  the  augmentation  of 
funds  to  purchase  slaves,  in  addition  to  the  annual  million, 
will  be  as  follows  : 


The  9th  year 


$ 1,000,000 
2,000,000 

3.000. 000 

4.000. 000 


10th  do 
11th  do 
12th  do 


And  so  on,  in  the  same  ratio.  Thus  the  slaves  which  double 
only  in  25  years,  will  have  an  annual  appropriation  of  one 
million  to  reduce  their  numbers  annually,  and  also  a sum  by 
wages  which  will  be  yearly  increasing  the  power  of  purchas- 
ing, at  a compound  ratio,  doubling  every  eight  years. 

Should  this  plan  be  resolved  upon,  and  put  in  practice,  all 
the  apprehensions  from  the  gathering  storm,  now  so  justly  en- 
tertained, wTill  be  dispersed;  and  it  will  soon  be  found  that  more 
slaves  will  be  purchased  than  can  be  easily  hired  out. 

The  expenditures  on  the  purchase  of  slaves  will  throw  a 
great  sum  of  money  annually  into  the  slave  States,  to  enable 
land  owners  to  make  improvements.  This  influx  of  money 
will  promote  also  manufactures : for  it  will  be  most  advanta- 
geous to  establish  them  where  the  raw  material  is  produced; 
and  loans  also  may  be  made  by  Congress  to  manufacturers  at 
three  per  cent,  with  a condition  that  the  hands  employed  shall 
be  hired  from  the  Board  of  Emancipation.  This  will  be  a 
good  mode  for  the  appropriation  of  the  surplus  of  the  money 
gained  by  the  national  currency.  This,  however,  is  a subject 
only  collaterally  affecting  the  Board  of  Emancipation ; for 
the  board  is  only  to  receive  sums  from  Congress  wherewith 
to  purchase  slaves,  and  to  hire  them  out,  and  to  transfer  them, 
after  eight  or  ten  years’  service,  to  the  Colonization  Society. 

It  may  be  said  that  Congress  ought  not  t©  appropriate  mo- 
ney, by  which  the  slave  States  must  exclusively  benefit ; but 
to  this  I reply  : Did  not  Congress  expend,  in  war,  an  hundred 
million  of  dollars,  to  protect  American  seamen  from  impress- 
ment ? And  let  me  ask,  whether  the  slave  States  had  many  sea- 
men to  protect  ? and  whether  the  slave  States  did  not  greatly 
suffer  by  want  of  commerce  to  export  their  agricultural  pro- 
ductions ? Was  not  wheat  given  to  their  hogs  ? But  let  us 
scorn  these  local,  selfish,  partial  views,  so  repugnant  to  moral 
brotherly  feelings,  and  so  destructive  of  the  general  interest. 

If,  then,  the  general  good  justifies  an  appropriation  of  mo- 
ney by  Congress,  who  can  deny  that  the  safety  and  prosper!- 


#2 


ty  of  all  of  us  are  involved  in  the  increase  or  decrease  of  our 
slaves. 

The  slaves  have  increased  in  the  following  ratio : 

1790.  180®.  1810.  1820. 

690,307  896,349  1,191,364  1,543,688; 

exclusive  of  colored  persons  and  slaves  made  free,  which  in  - 
creased as  follows : 


59,511  108,413  186,446  236,592 

The  calculation  is,  that  the  slaves  double  in  25  years. 


If 


they  now  exceed  -----  2,000,000, 

In  25  years  their  numbers  will  be  - 4,000,000 

In  50  do.  do.  do.  - 8,000,000 

In  75  do.  do.  do.  - - - 16,000,000 

In  100  do.  do.  do.  - 32,000,000 

This  progression  is  inevitable,  unless  policy  and  humanity 
unite  to  arrest  it.  Societies  formed  in  almost  every  State  of 
the  Union  evince  that  a general  feeling  is  excited,  and  a gen- 
eral attention  paid  to  this  most  important  subject.  The  Afri- 
can Colonization  Society,  of  which  the  Hon.  Bushrod  Wash- 
ington is  President,  and  our  best  and  most  exalted  characters 
are  members,  use  these  emphatic  words  : 


* * In  our  national  constitution,  young  and  vigorous  as  it  is,  there  exists  a 
•' ‘disease,  growingwith  our  growth,  and  strengthening  with  our  strength, 
•‘which,  unless  remedied,  will  ruin  us,  possibly  by  slow  decay,  probably  by 
“ sudden'violence.  Loudly,  then,  as  by  an  angePs  voice,  are  we  called  upon  to 
'^awake,  and  before  age  has  fixed  our  habits,  and  the  poison  become  mingled 
« in  the  fount  of  life,  make  those  exertions  which  may  secure  perpetual 
« strength,  purchase  immortal  glory,  and  save  us  from  terrors,  darkening  as 
“ we  advance,  which  invest  the  future  with  clouds  of  mysterious  and  tremen- 
dous calamity.” 

“ If  things  go  on  as  they  are,  words  more  terrible  than  plots  and  insurreo 
*•  tions  must  be  familiar  in  our  mouths  ; for,  notwithstanding  all  that  may  be 
“ done  to  keep  the  slaves  in  ignorance,  they  are  learning,  and  will  continue  to 
« learn,  something  of  their  own  power,  and  something  of  the  tenure  by  which 
«*  they  are  held  in  bondage.  They  are  surrounded  by  the  memorials  of  freedom  , 
**  the  air  which  they  breathe  is  free  ; and  the  soil  on  which  they  tread,  and 
««  which  they  water  with  their  tears,  is  a land  of  Mberty.” 


Must  not  every  part  of  the  Union  suffer,  should  the  slaves 
lay  waste  the  fields,  burn  the  houses,  and  murder  the  families 
of  their  masters  ? Surely  the  American  who  contemplates  the 
horrid  scenes  of  destruction  which  so  many  thousand  negro 
insurgents  must  produce,  will  sanction  an  annual  appropriation 
to  avert  the  calamity,  and  will  not  even  hesitate,  when  he  is 
shown  that  taxes  will  not  be  occasioned  thereby. 

The  attention  of  all  civilized  nations  is  given  to  the  existing 
violation  of  humanity  : happily  for  the  negroes,  free  States 
evince  that  they  flourish  more  than  slave  States ; and  writers 
on  political  economy  have  proved  that  free  labor  is  cheaper 
than  slave  labor. 

When  we  look  at  the  statement  of  exports,  we  find  that  th« 
valuable  articles  of  sugar,  cotton,  rice,  tobacco,  &c.  are  the 


53 


productions  of  warm  climates.  How  anxious,  then,  we  ought 
to  be  to  have  them  secured  in  permanency  by  the  gradual  ex- 
tirpation of  slaves,  and  by  the  introduction  of  generations 
of  freemen.  Such  a reformation  would  render  us  happy  at 
home,  and  applauded  abroad.  But  as  it  is  a wise  maxim  to 
undertake  only  one  thing  at  a time,  and  as  this  second  plan 
depends  upon  the  adoption  of  the  National  Currency  System, 
it  were  superfluous  to  enter  more  at  large  into  an  elucidation 
of  the  latter  suggestion. 

Should  the  former  be  adopted,  l will  separately  expatiate 
upon  the  second  desideratum. 

I had  laid  down  my  pen,  when,  in  the  Intelligencer  of  the 
15th  November,  eleven  letters  underwent  my  perusal,  promis- 
ing to  send  slaves  if  their  passage  would  be  paid.  One  offers 
emancipation  to  17;  another,  of  25  ; a third,  of  60;  but  the  writ- 
er, with  sorrow,  adds:  Si  Hundreds  of  persons,  well  recommend- 
ed for  their  moral  and  industrious  habits,  are  waiting  for  an 
opportunity  to  emigrate,  while  the  Society  is  left  without  the 
means  of  affording  them  a passage.  Shall  this  continue  to  be  so?” 

Note. — More  than  500  free  persons  of  color,  and  more  than  200  slaves,  are 
ready  to  go  to  Liberia.  A Church  meeting  is  advertised  in  Georgetown,  and 
another  in  the  City,  to  raise  subscriptions  to  provide  a vessel  for  them.  An 
ardent  desire  prevails  to  give  aid,  but  means  are  wanting  to  support  the  Coloni- 
zation Society. 

Each  warm  philanthropist  to  Church  repairs. 

And  gives,  ’tis  all  he  has  to  give,  his  prayers. 

Humanity  for  suffering  brethren,  in  vain 
Pours  forth  the  most  pathetic  sacred  strain. 

To  empty  pockets  ’tis  in  vain  to  plead, 

Congress,  alone,  can  make  the  plan  succeed. 


V 


' 


. 


APPENDIX. 


The  following  was  a kind  of  Episode  to  the  General  System, 
and  I intended  to  have  renewed  the  subject  before  Congress, 
but  I found  party  spirit  so  predominant,  and  all  other  mat- 
ters, however  important,  lost  sight  of  or  unheeded,  that  f 
remained  silent.  Now  the  terrible  contest  is  over,  the  in- 
terests of  our  common  country  will  be  deemed  worthy  of 
regard  : 


Mr.  LAW,  having  submitted  a financial  plan  to  Mr.  Clay,  whose  acuteness 
and  discernment,  and  whose  political  firmness  he  admired,  and  knowing  that 
his  multiplication  of  business  would  prevent  his  attention  thereto,  at  Mr.  L’s 
particular  desire,  three  gentlemen  were  named  by  Mr.  C.  to  investigate  the 
same,  and  to  give  their  sentiments. 

The  following  is  the  report  of  the  gentlemen  selected  : 

To  the  Hon.  the  Sfxretary  op  State  : 

Sm  : Having,  in  compliance  with  your  request,  verbally  communicated  to  us 
by  Thomas  Law,  Esq.,  perused,  and  attentively  considered,  certain  papers 

put  into  Our  hands  by  that  gentleman,  proposing  and  developing  a new  and 

advantageous  scheme  of  public  finance,  to  which  he  was  solicitous  of  attract- 
ing your  notice  and  sanction,  we  have  the  honor  of  submitting  the  following 
report  : 

Our  philanthropic  fellow-citizen,  the  author  of  this  fiscal  proposition,  seems 
to  have  taken  it  for  granted,  that,  if  the  means  could  once  be  devised,  the  Na- 
tional Legislature  would  not  be  slow  in  showing  the  inclination  to  patronise 
and  promote,  by  pecuniary  aid,  the  great  work  of  Internal  Improvement ; and, 
upon  this  assumption,  the  whole  energies  of  a mind , not  less  remarkable  for 
the  unabated  vigor  of  its  conceptions,  than  for  its  persevering  devotion  to  the 
general  service  of  the  human  family,  have  been  directed  to  the  discovery  of 
this  desideratum — to  the  invention  of  a moneyed  capacity,  which  shall 
be  available,  without  imposing  a burthen  upon  the  Treasury,  and  which  may 
become  efficient  in  promoting  the  great  end  in  view,  without  drawing  upon 
the  public  revenue,  or  materially  diminishing  the  sources  from  which  it  is 
derived. 

The  first  and  principal  object  proposed  to  be  accomplished,  seems  to  be 
the  creation  of  means  for  immediately  commencing  and  prosecuting  to  its  com- 
pletion, the  contemplated  Canal  to  unite  the  waters  of  the  Ohio  and  the  Chesa- 
peake ; a work  which  has  long  engaged  the  attention,  and  called  forth  the 
active  energies,  of  many  of  the  most  scientific,  public-spirited,  and  patriotic 
of  our  citizens.  But  it  will  be  seen,  from  the  nature  of  the  plan,  that,  if  adopt- 
ed and  carried  into  successful  operation,  in  this  our  great  national  undertak- 
ing, it  may  be  applied  with  equal  facility  and  success,  to  the  accomplishment 
of  every  other  scheme  of  Internal  Improvement,  which  it  may  be  found  the 
interest  or  pleasure  of  the  United  States  to  encourage  and  promote. 

The  proposition  is  of  the  simplest  character,  and  may  be  explained  in  a few 
words.  It  is  this  : That  the  Government  be  authorized,  by  an  act  of  Con- 
fess, to  issue  Treasury  Notes , not  bearing  interest,  of  various  convenient  de- 
nominations, from  Jive  to  a thousand  dollars,  to  the  amount  of  Jive  millions , 
yhich  is  the  estimated  cost  of  the  Canal ; to  be  made  receivable  at  the  Trea- 


56 


sury  and  different  Land  Offices,  in  payment  for  public  lands.  That  the  Go- 
vernment be  further  authorized  to  loan  these  Treasury  Notes , or  scrip,  to  any 
individual  or  corporation,  who  shall  subscribe  for  shares  in  the  Canal,  to  the 
amount  of  such  loan,  at  an  interest  of  three  per  cent,  per  annum;  that  the  pay- 
ment of  the  principal  so  loaned,  as  well  as  of  the  interest  accruing  on  it,  be 
secured  to  the  United  States,  in  the  first  place,  by  the  pledge  of  the  shares  for 
which  the  borrower  shall  have  subscribed  ; and,  secondly,  by  some  additional 
and  different  security,  which  shall  be  deemed  equivalent  in  value  to  one-fourth 
of  the  loan  ; that,  at  the  expiration  of  five  years  from  the  date  of  the  loan,  at 
which  time  it  is  reasonable  to  suppose  the  contemplated  Canal,  or  other  work 
undertaken,  will  have  been  completed,  and  that  the  revenue  from  it  will  be 
already  sufficient  to  divide  a considerable  profit  to  its  stockholders,  the  bor- 
rower be  called  upon  to  repay  to  the  U.  States,  five  per  cent,  of  the  principal 
loan,  and  the  same  annually  thereafter ; or  more  or  less,  at  the  discretion  of  the 
Government,  until  the  whole  sum  borrowed  be  repaid ; and  that,  upon  the 
failure  of  the  borrower,  at  any  time,  to  pay  the  interest,  or  any  portion  of  the 
principal,  at  the  periods  when  the  same  shall  become  due,  the  shares  which 
shall  have  been  pledged  shall  be  forfeited,  and  the  additional  security  of  one- 
fourth  shall,  in  like  manner,  be  made  available  to  the  use  of  the  United 
States. 

But,  as  it  is  believed  that  the  sum  of  a million  of  dollars  will  be  as  much  as 
can  be  conveniently  or  advantageously  expended,  in  any  one  year,  it  is  pro- 
posed, that  no  more  than  that  sum  of  Treasury  Notes  shall  be  annually  issued, 
until  the  whole  amount  of  five  millions  shall  have  been  demanded. 

It  forms  a part  of  the  proposition  of  Mr.  Law,  however,  though  it  does  not 
constitute  an  essential  feature  of  his  plan,  that  the  Government  itself  shall  be 
authorized  to  subscribe  one-third  of  the  notes  or  scrip  issued.  The  advantages 
that  would  be  derived  to  the  public  from  a participation  by  the  Government  in 
the  shares  of  the  Canal,  or  any  other  public  improvement,  are  so  obvious  that  it 

Can  Scarcely  be  necessary  to  recite  them.  It  would  communicate  a more  directly 

national  character  to  the  work,  would  inspire  a general  confidence  in  its  ulti- 
mate success,  and  would  induce  moneyed  individuals  to  embark  in  its  prose- 
cution. 

It  may  be  observed,  too,  that  the  proposition  to  limit  the  direct  interest  of 
the  Government  to  one-third  of  the  stock,  is  not  without  its  attendant  advan- 
tages. Were  the  Government  to  become  concerned  to  an  extent  of  shares, 
which,  by  the  established  usages  of  such  Companies,  would  give  it  a prepon- 
derating influence  in  the  appointment  of  Directors,  Contractors,  and  Agents, 
there  is  good  reason  to  believe,  that  less  economy,  both  of  time  and  money, 
would  be  observed,  and  less  attention  paid  to  all  the  great  interests  at  stake, 
than  if  the  chief  management  were  entrusted  to  individuals,  or  Corporations, 
by  allowing  them  to  subscribe  a majority  of  the  stock. 

Having  thus  presented  to  you  the  plan  offered  by  Mr.  Law,  in  its  naked 
and  simple  character,  we  might  properly,  perhaps,  consider  ourselves  absolved 
from  further  duty,  and  here  close  our  Report  without  further  remark.  But 
we  should  be  doing  great  injustice  to  the  venerable  and  truly  benevolent  au- 
thor of  this  extensive  scheme  of  National  Improvement,  and  subject  ourselves, 
in  his  eyes  at  least,  if  not  in  yours,  to  the  reproach  of  having  neglected  an  im- 
portant part  of  the  task  expected  from  us,  were  we  to  refrain  from  bringing 
into  view  some  of  the  arguments  by  which  both  the  practicability  and  expe- 
diency of  the  measure  proposed  may  be  supported.  It  is  manifest,  even  upon 
the  most  superficial  view  of  the  plan,  that  its  success,  admitting  it  to  be  adopt- 
ed and  encouraged  by  the  whole  authority  of  Congress,  and  fortified  by  the 
most  solemn  sanctions  of  law,  must  depend,  not  upon  its  own  intrinsic  merits, 
nor  upon  the  power  of  the  Government  to  enforce  its  favorable  reception,  but 
upon  the  good  will  of  contractors,  laborers,  and  owners  of  the  various  mate- 
rials that  may  be  required  in  the  prosecution  of  the  work  to  be  undertaken.  It 
will  be  for  them  to  say,  whether  the  Treasury  Notes  issued,  shall  or  shall  not 
be  a measure  of  value ; whether  they  are  or  are  not  equivalent  to  what  they 
are  iatended  to  represent.  If  all  or  any  one  of  these  several  classes  ofthe  cournu- 


57 


nity,  upon  whom  the  execution  of  the  work  must  dev  olve,  shall  refuse  to  re- 
ceive,  in  payment  for  their  time,  their  labor,  or  their  materials,  the  Treasury 
Notes  which  shall  be  subscribed,  in  lieu  of  the  common  circulating  medium, 
for  shares  in  the  proposed  Canal  or  other  work  so  undertaken,  then  it  follows, 
as  a necessary  consequence,  that  the  whole  scheme  falls  to  the  ground.  But 
it  is  equally  evident  that  the  abortion  of  the  scheme  can  produce  no  possible 
evil  either  to  the  Government  or  to  the  community ; unless,  indeed,  the  loss 
of  time  to  the  officers  of  the  Treasury,  in  preparing  and  issuing  unavailable 
promises,  should  be  so  considered.  Even  this  partial  evil,  however,  may  be 
avoided,  as  it  will  be  very  easy  to  ascertain,  after  the  authority  is  given,  and 
before  any  steps  are  taken  to  act  upon  it,  whether  those  concerned  would  or 
would  not  be  willing  to  receive  the  scrip  if  issued.  But  experience  will 
authorize  us  to  entertain  a more  favorable  opinion  of  the  credit  due  to  Go- 
vernment paper.  It  is  within  the  recollection  of  most  of  us,  that  the  scrip  issu- 
ed for  the  payment  of  the  Mississippi  lands,  not  only  readily  passed  current 
at  its  par  value,  but  was  eagerly  sought  after  by  the  purchasers  of  the  public 
lands,  as  being  more  safely  transmissive  than  specie,  and  more  easily  attainable 
than  bank  paper,  at  a period  when  the  Banking  System  in  this  country  was  in 
its  infancy,  and  when  the  public  faith  in  the  virtue  of  a bank  note  was  much 
stronger  than  it  has  since  been.  It  must  be  observed,  too,  that  this  scrip  was 
made  receivable  only  at  the  Mississippi  Land  Offices,  and  that  when  the 
amount  issued  once  returned  to  the  Treasury,  its  further  circulation  ceased. 
It  was,  moreover,  issued  in  large  sums,  not  at  all  convenient,  nor  designed  as  a 
medium  of  general  exchange,  but,  on  the  contrary,  as  a mere  evidence  of  a 
debt  to  certain  land  claimants  ; and  it  was  thus  converted  into  an  object  of 
speculation  among  the  wealthy,  rather  than  employed  as  a moneyed  resource 
to  the  needy  and  laboring  classes. 

If,  with  all  these  disadvantages,  the  Yazoo  scrip,  as  it  was  called,  maintained 
its  credit,  and  effectually  served  the  purpose  for  which  it  was  issued,  it  will 
scarcely  admit  of  doubt,  that  a paper,  established  upon  so  much  broader  a 
basis  of  national  faith,  issued  in  convenient  sums  for  ready  exchange,  receiva- 
ble wherever  the  United  States  have  lands  for  sale,  and  having  for  its  object 
the  accomplishment  of  a great  scheme  of  internal  improvement,  in  which  the 
whole  nation  is  interested,  and  which  is  to  call  into  operation  so  vast  an 
amount  of  labor  and  materials — it  can  hardly  be  doubtful,  we  say,  that  such  a 
paper  will  be  received  as  readily,  and  will  as  certainly  become  a medium  of 
circulation,  as  the  promissory  notes  put  forth  by  the  Bank  of  the  United 
States,  so  called. 

Besides,  it  is  a fact,  as  notorious  as  it  is  to  be  deplored,  that  the  present  cur- 
rency of  a great  portion  of  the  Western  Country,  is  of  that  feeble,  unsubstan- 
tial character,  that  it  loses  the  power  of  performing  its  functions,  if,  by  any 
accident,  it  wander  beyond  the  narrow  confines  within  which  it  was  forced 
into  being,  and  maintains  its  sickly  existence.  It  is  in  fact  scarcely  more  than 
a nominis  umbra  even  within  its  own  particular  circuit  of  motion. 

Any  substitute  for  a medium  of  exchange  so  precarious  and  uncertain  in  its 
value,  would  most  probably  be  eagerly  received  and  entertained  ; and  it  is 
chiefly  within  the  same  circle,  that  the  proposed  notes  would  be  required  to 
circulate. 

The  owners  of  the  stone,  the  lime,  and  the  various  other  materials  which 
the  work  would  require,  and  which,  but  for  the  demand  created  by  such  a 
work,  would  perhaps  rest  for  centuries  in  the  bosom  of  the  earth,  a sterile 
and  unproductive  mass,  would  readily  exchange  them  for  any  thing  that  pro- 
mised even  a possible  conversion  into  more  active  property. 

The  labor  which  would  be  brought  into  requisition  for  the  work,  it  is  gen- 
erally believed,  would  be  principally,  if  not  entirely,  performed  by  slaves,  the 
proprietors  of  whom,  being  for  the  most  part  landholders,  in  the  habit  of  laying 
out  their  surplus  profits  in  the  constant  accumulation  of  acres,  will  make  no 
difficulty  in  receiving  a Government  paper  by  which  they  can  accomplish 
their  accustomed  purchases.  If  those  who  furnish  the  materials  and  the  labor, 

8 


58 


?.re  found  willing  to  receive  these  Treasury  notes,  it  will  follow  as  a matter  of 
course,  that  all  others  in  any  way  required  to  be  connected  with  the  work, 
will  be  equally  ready  to  give  them  currency  and  circulation,  and  they  would 
thus  soon  be  invested  with  all  the  attributes  of  money.  Even  the  State  Banks, 
it  is  believed,  would  find  it  their  interest  to  encourage  and  promote  the  circu- 
lation of  these  notes.  It  would  bring  additional  facilities  within  the  reach  of 
their  debtors  ; and,  by  enabling  them  to  pay  their  debts,  restore  to  the  Banks 
the  means  of  further  accommodation,  and  put  it  in  their  power  to  enhance 
the  credit  of  their  stock,  by  supplying  the  ability  to  pay  the  usual  dividends  to 
their  stockholders. 

Lastly:  It  is  the  prevailing  opinion  of  the  best  informed  political  econo- 
mists, that  the  present  amount  of  circulating  medium  in  the  country,  is  not 
sufficient  for  the  exigencies  of  its  rapidly  increasing  population.  If  this  opin- 
ion be  correct,  and  it  is  supported  by  many  able  arguments,  the  most  of 
which  are,  no  doubt,  familiar  to  you,  we  can  have  but  little  hesitation  in  be- 
lieving, that  an  additional  amount  of  currency,  the  soundness  of  which  shall 
be  guarantied  by  a pledge  of  the  national  faith,  will  be  cordially  welcomed 
by  all  classes  of  the  community. 

And  now,  as  to  the  expediency  of  the  plan.  We  could,  perhaps,  scarcely 
furnish  even  a brief  abstract  of  the  arguments  that  might  be  urged  in  its  sup- 
port, without  extending  this  report  much  beyond  any  reasonable  limit.  All 
the  reasoning  which  has  been  used,  both  in  and  out  of  Congress,  in  favor  of  the 
general  policy  of  granting  the  aid  of  the  Government  to  works  of  internal  im- 
provement, may  be  applied  with  equal  force  to  show  the  propriety  of  prefer- 
ing  such  a scheme  of  giving  that  aid,  rather  than  by  adopting  the  usual  mode 
of  appropriating  the  public  revenue,  which  is  seldom  more  than  sufficient  to 
cover  the  ordinary  expenditures  of  Government. 

The  objection  which  has  been,  on  many  occasions,  and  with  some  show  of 
justice,  urged  against  the  policy  of  making  the  whole  nation  tributary  to 

Schemes  of  improvement,  'wfaicti  must,  in  tUe  nature  of  things,  be  local  and 

partial  in  their  benefits,  is  entirely  removed  by  the  plan  here  suggested  of 
creating  the  means. 

As  the  success  of  the  plan  must  depend  upon  the  voluntary  judgment 
which  the  public  may  form  of  its  fitness,  none  will,  of  course,  contribute,  but 
those  who  expect  to  partake  of  the  benefits,  and  who  will  have  a direct  inter- 
est in  the  profits  of  the  work  contemplated.  As  an  interest  of  three  per  cent, 
will  be  paid  upon  all  the  scrip  issued  and  loaned,  the  National  Treasury,  in- 
stead of  being  exhausted  to  give  undue  support  and  protection  to  any  parti- 
cular class  of  citizens,  or  to  any  merely  local  improvement,  will,  in  reality,  be 
enriched  by  the  very  means  taken  to  afford  that  support  and  protection. 

In  conclusion,  we  cannot  forbear  to  remark,  that  whether  the  author  of  the 
suggestion  here  made  be  right  or  wrong  in  the  ground  assumed  as  to  the  dis- 
position of  Congress,  he  must  indeed  be  a fastidious  stickler  for  the  bare  and 
rigorous  letter  of  the  Constitution,  who  can  find,  in  any  fair  construction  of 
that  instrument,  a valid  objection  to  the  adoption  of  a scheme  which  promises 
such  extensive  benefits  to  his  country  at  large,  without  encroaching  upon  the 
rights,  or  curtailing  the  peculiar  advantages  of  any  portion  of  it ; which  prom- 
ises to  ameliorate  and  improve  the  general  condition  of  all  the  great  classes  of 
the  community,  without  sacrificing  or  diminishing  the  particular  interests  of 
any ; which  promises,  in  short,  to  augment  the  resources  of  the  nation,  without 
subtracting  from  those  of  a single  individual. 

We  beg  to  be  understood,  however,  as  making  this  remark,  not  upon  the 
presumption  that  the  plan,  if  adopted,  must  necessarily  accomplish  all  that  it 
promises, .but  upon  the  consideration  that,  as  its  failure  could  bring  with  it  no 
serious  evil,  its  application,  if  successful  at  all,  must  be  successful  to  an  extent 
which  may  well  justify  the  experiment. 

We  have  the  honor  to  be,  Sir,  very  respectfully,  your  obedient  servants. 

T.  WATKINS, 

DANIEL  BRENT* 

WM.  BRENT. 


Washington,  12th  February,  1827. 


59 


Mr.  Clay,  though  pressed  by  various  concerns  of  State,  unwilling  to  let  any , 
proposal  for  the  general  good  pass  unnoticed,  whilst  he  admitted  the  philan- 
thropy and  general  intelligence  of  the  proposer,  made  a few  remarks  upon  the 
plan,  which  are  referred  to  in  the  following  replies  thereto.  To  the  consid- 
eration of  the  public  it  is  now  submitted  by  the  author. 


To  Messrs.  Tobias  Watkins , Daniel  Brent,  and  William  Brent  .* 


Gentlemen  : I am  much  gratified  by  your  report  upon  my  plan,  highly  flat- 
tered by  the  prompt  attention  of  Mr.  Clay  to  the  report,  and  am  truly  gratified 
by  your  ample  development  of  my  sketch,  1 and  corroboration  of  it,  with 
powerful  arguments,  in  a perspicuous  style.  Mr.  Clay  has  shown  a desire  of 
discussion,  and  a very  unusual  candor  in  a Statesman  ; indeed,  I could  not 
have  expected  that  a Secretary  of  State,  overwhelmed  with  a multiplicity  of 
business,  would  have  condescended  to  send  his  written  observations,  which, 
of  course,  being  hastily  suggested,  might  expose  him  to  illiberal  criticism  : far 
be  from  me  any  disposition  but  that  of  thankfulness  for  the  opportunity  thus 
afforded  me  to  answer  objections,  and,  thereby,  to  render  my  plan  more  per- 
spicuous. If  I had  been  convinced  of  any  defects,  I . would  cheerfully  have 
corrected  them,  having  laid  it  down  as  a rule  through  life,  to  acknowledge 
error — thereby  proving  myself  wiser  to-day  than  I was  yesterday. 

1 will  now,  as  distinctly  and  as  fully  as  I can,  state  every  suggestion,  and  sub- 
join my  replies.  If  the  Secretary  should,  upon  re-consideration,  find  his 
doubts  removed,  it  is  satisfactory  to  know  that  he  has  liberality  to  avow  it, 
and  political  zeal  and  fortitude  to  promote  that  which  may  benefit  his  nation. 
This,  therefore,  encourages  me  to  persevere. 

First  suggestion. 

“ The  Congress,  by  subscribing  one-third  to  the  Chesapeake  and  Ohio 
Canal,  as  far  as  Cumberland,  and  by  lending  notes  not  bearing  interest, 
fundable  in  the  Land  Offices,  runs  the  whole  risk  of  the  capital  of  the  Canal, 
estimated  at  5, 000,000  of  dollars.** 


Reply.  The  Congress  has  the  application  of  a Convention,  which  has  twice 
assembled  in  the  City  of  Washington ; it  has  also  the  able  report  of  Mr.  Stew- 
art, Chairman  of  a Committee  of  Congress,  wherein  the  sentiments  of  General 
Washington  are  fully  recorded  ; it  has  also  numerous  other  reports.  If,  there- 
fore, Congress  obtained  only  four  per  cent,  by  the  dividends  of  the  Canal,  di- 
rectly into  the  Treasury,  the  Canal  will  have  benefitted  the  nation  in  a variety 
of  indirect  ways,  viz  : By  increased  exports,  and  consequently,  by  duties  on 
imports  ; but  it  would  occupy  too  much  space  to  enumerate  them,  and  I am 
conscious  fehat  too  many  volumes  have  been  already  written  upon  this  subject, 
for  me  to  expatiate  upon  it. 

I proposed  that  only  an  additional  security  of  twenty-five  per  cent,  should 
be  taken,  because,  from  the  great  dividends  of  the  New  York  Canal,  and 
from  the  estimates  of  the  Maryland  Commissioners,  and  others,  I had  no  doubt 
that  the  Canal  would  yield  dividends  to  pay  the  instalments,  and  I was  unwil- 
ling to  lock  up  too  much  private  property  needlessly.  I also  calculated  that 
the  stock  would  be  at  a premium.  Should  Congress  require  more  security, 
they  may  determine  the  quantum  and  the  quality  ; whether  endorsed  notes, 
or  stocks  of  banks,  &c.  &c.  or  deeds  of  trust  on  estates.  Should  the  Canal 
yield  principal  and  interest  by  dividends,  the  collateral  security  will  of  course 
be  cancelled. 

If  the  Canal  be  finished  in  five  years,  and  one  million  be  annually  applied, 
individuals  will  have  to  pay  to  Government,  three  per  cent.,  in  the  following 
manner  : 

The  1st  year,  on  $666,666  2-3  $19,999 

2d  do.  on  do.  39,998 

3d  do.  on  do.  59,997 

4th  do.  on  do.  79,996 

5th  do.  on  do.  99,995 

Let  us  think  how  many  subscribers  there  will  be  to  raise  these  trifling  sums. 


60 


Suppose  each  to  subscribe  to  the  amount  of  1,000  dollars,  there  will  be  6,666 
subscribers,  and  each  subscriber  of  1,000  dollars,  paying  one-fifth  of  three 


The  1st  year  will  only  have  to  pay 

- 

$ 6 

2d  do. 

- 

12 

3d  do.  - 

- 

18 

4th  do.  - 

- 

24 

5th  do.  ... 

- 

30 

Even  before  this  period,  General  Bernard  and  the  Engineer  Board  say 
there  may  be  some  dividends  of  considerable  amount. 

After  the  fifth  year,  not  only  three  per  cent,  interest  is  to  be  paid,  but  five 
per  cent,  of  the  principal.  Some  say  that  the  Canal  will  yield  fifteen  per 
cent. ; others  say  ten  ; but  I will  suppose  only  five  per  cent.  ; thus  the  sub. 
scribers  will  have  to  pay  three  per  cent. , diminishing  every  year,  and  at  the 
expiration  of  twenty  years,  they  will  become  sole  proprietors  of  1,000  dollars 
stock,  free  of  all  security.  It  must  be  admitted  by  all,  that  I have  estimated  a 
very  small  income  from  the  Canal,  if  they  consider  how  the  increasing  popula- 
tion, the  transportation  of  goods,  coal,  lime,  slate,  lead,  marble,  timber,  &c. 
&c.  must  annually  augment  the  tolls. 

I have,  I trust,  answered  the  objection,  that  Congress  will  incur  risk  from 
the  subscribers  to  the  Canal,  to  whom  they  lend  their  land  notes,  and,  on  the 
contrary,  proved  that  the  nation  will  gain  three  per  cent,  upon  their  issues. 
It  is  not  urged  that  subscribers  will  not  be  found  ; there  will,  I fear,  be  too 
many. 

I took  the  hint  of  the  plan  I have  proposed,  from  a publication  of  the  Brit- 
ish Government,  offering  to  loan  money  at  three  per  cent,  for  subscribers  to 
Canals  in  Canada,  if  the  subscribers  would  secure  to  the  Government  the 
three  per  cent,  interest,  and  the  ultimate  liquidation  of  the  principal,  in  mod- 
erate instalments.  Tbe  luudable  object  of  tbc  Brltiab  Government  being  to 

divert  the  commerce  from  Lake  Erie,  from  the  North  River,  to  the  River  St. 
Lawrence.  If  so  experienced  and  enlightened  a nation  deems  it  good  policy 
to  lend  money  to  subscribers  in  a distant  colony,  for  which  purpose  specie 
must  be  sent  out  of  the  Kingdom,  how  much  more  politic,  (I  thought  to  my- 
self,) it  must  be,  for  the  United  States  to  lend  land  notes,  whereby  the  value 
of  the  land  will  be  raised,  a great  improvement  made  in  the  interior  of  the 
country,  and  individuals  will  be  enabled  to  subscribe,  who  have  now  much 
property,  but  no  money. 

The  second  suggestion  is,  “ that  the  Mississippi  stock  is  not  analagous,  be- 
cause there  was  an  obvious  and  certain  mode  of  its  absorption,  and  that  it  was 
much  below  par  for  a considerable  time.” 

Reply.  The  mode  of  absorption  I propose,  is  precisely  the  same  for 
these  notes,  as  for  the  Mississippi  stock  ; the  notes  are  to  be  receivable  for 
land  at  the  several  offices.  I own  that  the  discount  on  the  Mississippi  stock 
was  at  first  considerable,  because  most  of  the  holders  resided  at  Boston,  and 
because  the  notes  were  given  in  large,  inconvenient  sums,  and  because  they 
were  receivable  only  in  the  Land  Offices  of  one  State  ; but  it  was  soon  found 
that  the  persons  wanting  land  purchased  with  specie,  or  bank  notes,  the  stock 
to  pay  for  the  land,  and  such  was  the  demand  for  land,  then  saleable  partly  on 
a credit,  that  the  purchasers  ran  in  debt  to  Government  $20,000,000,  which 
they  could  not  pay.  Government,  therefore,  was  compelled  to  cancel  the 
debt,  and  retake  their  land,  and  the  reason  assigned  for  inability  of  purchas- 
ers to  pay,  was,  that  the  Mississippi  $ 5, 000,000  of  notes  had  merged  in  the 
Treasury,  and  no  more  were  issued.  I argue  that  there  will  be  an  absorption 
from  the  following  data : 

The  population  of  the  United  States  now  amounts  to  15,000,000,  and  will  be 
doubled  in  twenty-three  years,  at  any  rate  in  twenty-five  years,  which  is  the 
time  allotted  for  finishing  the  Canal  accounts,  viz  : Five  years  to^complete  the 
Canal,  and  twenty  years  to  pay  in  the  instalments. 


61 


Of  the  15,000,000  of  citizens, four-fifths  (according1  to  Mr.  Mathew  Carey  and 
other  writers’  statements)  are  employed  in  agriculture,  or  - - 12,000,000 

Of  these,  I will  deduct  one-half  for  purchasers  of  private  lands,  6,000,000 

6,000,000 

I estimate  each  family  to  consist  of  five;  there  will,  therefore,  be 

families,  1,200,000 

If  each  family  requires  only  100  acres,  the  quantity  sold,  at  $1  25, 

will  amount  to---- 150,000,000 

Let  it  be  considered  that  there  are  now  about  thirty  land  offices,  and  that 
the  appalling  difficulties  of  first  settlers  are  surmounted,  and  that  steam  boats, 
roads,  and  canals,  encourage  emigration  to  the  new  States.  It  is  said  that 
20,000  persons  quitted  the  United  States  to  go  to  Texas,  last  year  : poverty 
drove  them  there.  If  notes  similar  to  those  1 propose  had  been  in  circulation, 
this  ruinous  emigration  would  have  been  checked,  if  not  totally  prevented. 

The  last  objection  is,  “ That  Contractors,  &c.  will  not  give  credit  to  the 
paper.  What  can  contractors  do  with  it  if  the  public  will  not  receive  it  ?” 

Reply  : You,  gentlemen,  who  reported  on  my  propositions,  have  antici- 
pated this  objection,  and  I am  almost  apprehensive  that  you  may  deem  your 
reports  so  lucid  and  ample,  that  I may  be  accused  of  unnecessary  enlargement, 
and  I can  only  plead  the  importance  of  the  subject  in  my  justification. 

Will  not  the  landholders  be  glad  to  exchange  bread,  corn,  poultry,  meat, 
lime,  stone,  iron,  &c.  now  wanting  a market,  for  these  notes  } Will  not  shop- 
keepers be  glad  also  ? And  will  not  the  banks  also  rejoice  ? These  distant 
States  are  now  annually  impoverished  by  the  sales  of  land  : for  the  offices  re- 
mit the  specie  received  to  the  Bank  of  the  United  States.  The  political  econ- 
omist will  view  this  issue  of  notes,  and  the  accomplishment  of  roads  and  canals, 
as  absolutely  requisite  to  promote  prosperity.  I rely  upon  the  circulation  of 
these  notes,  not  only  to  effect  the  proposed  canal,  but  to  prove  a stimulus  to 

nUmerOUS  private  improvcmento.  One  proposition  of  mine  to  give  additional 

credit  to  these  notes,  is,  to  take  them  in  payment  of  the  interest  and  of  the 
principal,  as  they  become  due  from  the  subscribers  to  the  canal.  This  will 
cause  the  notes  greater  circulation,  and  as  the  Government  may  re-issue  the 
same  notes  in  payment  to  the  Canal  Company,  there  will  be  a complete  flow 
from  the  Treasury  and  back  again,  as  the  blood  is  thrown  from  the  heart 
to  the  extremities,  and  from  thence  back  to  the  great  supplier  and  receiver. 
It  would  occupy  many  sheets  of  paper  to  make  my  readers  comprehend  how 
much  this  new  world  is  retarded  in  its  progress  by  a want  of  money.  I should 
be  obliged  to  begin  at  the  mines  of  Spanish  America,  and  to  pursue  the  gold 
and  silver  ores  and  coins,  and  to  dilate  upon  the  consequences  of  scarcity  and 
plenty  ; and  then  to  give  an  account  of  paper  money,  from  its  origin  to  its  pre- 
sent condition.  Two  committees  of  Congress  sat  upon  this  momentous  sub- 
ject, and  neither  of  them  made  a report.  This  plan,  humbly  suggested,  may 
cause  an  experiment  productive  of  unforeseen  permanent  beneficial  conse- 
quences, extending  to  all  the  community.  My  age,  and  two  severe  sicknesses, 
•which  have  left  me  much  debilitated,  deprive  me  of  the  hope  of  being  grati- 
fied by  the  cheering  sight  of  the  result  of  my  plan,  and  at  the  last  hour  I can- 
not reap  any  benefit  from  it.  I trust,  therefore,  that  you  will  consider  this  as 
the  concluding  effort  of  one  who  has  perhaps  read  more,  and  thought  more, 
upon  this  subject,  than  any  person  now  in  existence,  and  that  my  readers  will 
reject  all  prejudices,  and  maturely  deliberate  upon  a mode  whereby  the  ob- 
jects so  much  desired  by  all  sensible  well-wishers  to  their  country,  may  be 
readily  attained,  and  without  which,  I seriously  fear,  that  they  will  be  long 
postponed. 

I will  not  conceal  from  view,  that  the  specie  now  paid  into  the  Land  Offices 
may  be  diminished  by  the  substitution  of  Land  Notes ; but  it  must,  on  the  other 
hand,  be  acknowledged,  that  the  lands  will  rise  in  value,  as  there  will  be  more 
capitalists  to  purchase  ; namely,  the  specie  holders,  and  the  note  holders.  An 
analogous  case  occurred  in  India,  which  I hope  to  be  excused  for  citing.  The 


62 


Company  had  a monopoly  of  salt  about  forty  years  ago  : the  Company’s  bonds, 
bearing  12  per  cent,  being  at  a heavy  discount,  and  the  salt  sales  being  con- 
fined to  specie,  I went  to  Marquis  Cornwallis,  the  Governor  General,  and  said 
to  him,  “ My  Lord,  the  salt  sells  low,  as  there  are  only  a few  specie  holders  : 
would  it  not  be  wise  to  receive  the  bonds  at  par,  for  salt  ?”  I explained  my 
reasons:  He  replied,  “But  how  can  we  pay  the  army  without  specie?”  I 
answered,  if  those  who  have  now  specie,  collected  for  the  purchasing  of  salt, 
should  buy  bonds,  to  gain  by  the  discount,  the  bonds  will  soon  be  at  par,  and 
then  you  can  easily  sell  bonds,  and  thereby  obtain  specie.  Marquis  Cornwallis, 
a judicious,  cautious,  energetic  man,  always  ready,  “ parnegotiisne  que  supra” 
complimented  me,  by  saying,  that  my  measures  had  been  hitherto  successful, 
and,  therefore,  he  would  meet  me  half  way  : he  ordered  the  salt  to  be  sold  for 
half  specie  and  half  bonds — the  inevitable  result  was,  the  salt  sold  higher,  and 
the  bonds  rose  to  par.  What  millions  have  been  lost  to  countries  by  the  im- 
becility of  their  Financiers,  who  depreciated  the  credit  of  the  nation,  by  giving 
a preference  to  the  credit  of  associations  of  a few  individuals,  who  had  no  credit 
and  no  resources  but  those  they  derived  from  the  Governments  of  those  coun- 
tries. An  interesting  and  a very  useful  chapter  might  be  written  upon  this 
subject. 

The  great  desiderata  which  I had  in  contemplation,  when  I submitted  my 
plan  to  the  Committee  whom  Mr.  Clay  desired  to  report  upon  it,  were  : 

First.  To  show  what  a solid  basis  for  promissory  notes,  three  or  four  hundred 
millions  of  acres  could  be  made,  which  valuable  acres  were  now  almost  des- 
pised, and  which  a member  of  Congress  has  proposed  to  sell  for  25  cents  per 
acre. 

Second.  To  demonstrate  that  a limited  paper  currency,  consisting  of  small 
notes,  of  five  dollars  and  upwards,  might  be  founded  on  that  land  basis,  far 
more  secure  than  the  notes  of  specie -promising  banks,  and  which  would,  in 
some  cases,  be  more  valuable  than  specie,  for  a remittance. 

Third.  To  accomplish,  by  these  Land  Notes,  the  C!an«xl  which  has  claimed 

so  much  attention,  from  the  time  of  the  patriotic  originator,  Washington,  who 
applied  so  much  thought,  feeling,  and  labor  to  it,  down  to  the  present  day, 
when  all  eyes  are  opened  and  all  minds  occupied  about  it,  that  the  Union  may 
be  cemented,  and  all  the  objects  unfolded  in  the  report  of  the  Committee  upon 
Internal  Improvement  be  attained. 

Fourth.  To  give  employment  to  thousands,  who  are  now  unproductive  for 
want  of  the  primum  mobile , and  suffering  distress,  and  who  might,  by  a proper 
application  of  labor,  not  only  make  public  improvements,  but  also  set  up  fac- 
tories and  mills  ; and,  in  short,  convert  a wilderness  into  a populous,  civilized, 
prosperous,  and  happy  country. 

Fifth.  To  increase  the  price  of  the  Nation’s  Land,  and  to  sell  a double,  if 
not  a quadruple,  quantity. 

Sixth.  To  create  a constantly  increasing  revenue  to  the  nation,  from  the 
dividends  upon  shares  in  Canals,  and  from  the  payment  of  interest  and  princi- 
pal on  loans  to  subscribers  : for,  if  they  paid  in  the  Land  Notes,  this  receipt  of 
them  by  Government  would  raise  their  value,  and,  when  received,  they  might 
be  re-issued  in  payments  to  the  Canal  Company.  Thus,  it  is  evident,  that, 
every  year,  more  of  them  would  be  flowing  into  the  Treasury,  and,  by  the  ex- 
perienced benefits  arising  to  the  community  from  their  circulation,  Congress 
might  be  induced  to  apply  the  same  system  to  making  a Canal  across  the  Isth- 
mus of  Florida,  and  across  the  Isthmus  in  Massachusetts,  from  Buzzard’s  Bay 
to  Barnstable  Bay,  &c. 

Seventh.  To  create  a capital,  in  stock,  for  subscribers,  bearing  an  annual 
interest,  which  would  increase  with  the  population  and  commerce  of  the  in- 
terior, and  which  would  operate  as  a circulating  medium  to  purchase  estates 
and  make  improvements.  These  Canal  Shares  would  be  a permanent  benefit 
to  the  community,  and  would,  in  the  hands  of  prudent  men,  generate  other 
capitals.  All  writers  upon  Political  Economy  agree,  that  the  accumulation  of 
capital  is  an  evidence  of  the  prosperity  of  a nation.  By  these  means,  society 


63 


is  indebted  for  a change  from  barter  and  concomitant  indigence,  to  the  state  of 
affluence  which  modern  civilized  nations  exhibit. 

Eighth.  To  unfold  to  my  fellow-citizens  their  vast  resources,  and  to  the 
world  the  efforts  of  enlightened  Republicans,  surpassing  all  that  Sovereigns 
have  ever  performed. 

Lastly.  To  divert  the  attention  of  impassioned  deraagoguesfromparty-spirit 
to  useful  works,  and  to  attach  the  hearts  of  individuals  to  their  true  friends  and 
real  patriots,  that  the  harmony  of  social  intercourse  might  be  enjoyed  in  peace 
with  all  mankind. 

Having  answered  all  the  objections  presented,  and  having  assigned  all  my 
motives  for  suggesting  my  plan,  I might  here  lay  down  my  pen  ; but  men  ac- 
customed to  exclaim  against  what  they  term  rags,  may,  perhaps,  compare  these 
notes  to  Assignats,  and  Continental  Money.  I,  therefore,  say  to  them,  “ the 
assignats  and  Continental  money  were  issued  coercively  during  a Revolution, 
when  the  issuing  insurgents  had  no  security  to  give,  and  no  quid  pro  quo  to  of- 
fer ; but  that  these  land  notes  are  to  be  desired  and  not  forced,  and  are  to  be 
exchanged  for  land,  which  is  the  great  desideratum  in  the  United  States.  The 
plan  I have  submitted  to  superior  judgments,  is  a simple,  feasible  one,  limited 
in  its  extent,  and  to  accomplish  a particular  purpose  of  the  utmost  importance, 
without  borrowing  from  foreigners,  and  without  withdrawing  any  of  the  na- 
tional funds  which  may  be  wanted  to  liquidate  the  national  debt,  or  to  erect 
fortifications  on  an  extensive  frontier.  It  is  a distinct  piece  of  financial  me- 
chanism, which  will  proceed  without  obstructing  any  of  the  operating  wheels 
of  Government,  and  will  accomplish  the  aggrandisement  of  our  country  by  a 
new  power,  as  it  were,  not  throwing  operatives  out  of  employ,  but  providing 
ways  and  means  to  bring  men  and  materials  into  use.  If  any  defect  can  be 
found  in  the  plan,  which  has  escaped  my  scrutiny,  I shall  approve  of  its  rejec- 
tion ; but  if  no  serious  objection  can  be  found,  I hope  that  wisdom,  philan- 
thropy, and  patriotism,  will  unite  to  make  an  experiment,  without  being  de- 
terred. by  the  o.on (-,;<! o i'a dr-in  /if  itc  being-  n.  novelty  : for  Newton’s  Planetary  Sys- 
tem, Harvey’s  Circulation  of  the  Blood,  and  many  other  established  truths, 
were  once  deemed  theoretical,  and  even  violently  opposed. 

Impressed  with  confidence  in  the  principles  of  Finance,  and  of  Political 
Economy,  ascertained  by  experience,  I now  conclude,  with  sentiments  of  gra- 
titude to  Mr.  Clay,  who  desired  the  gentlemen  selected  to  examine  the  plan, 
and  give  their  observations  to  him,  and  to  you,  gentlemen  of  the  Committee, 
who  have  given  so  luminous  a report. 

With  respect  and  esteem,  I remain  your  obedient  servant. 


February  \7th , 1827. 


THOS.  LAW. 


AN  ADDRESS 


DELIVERED  BEFORE 

THE  COIVMBIAK  INSTITUTE, 

December  17,  1825. 


Gentlemen  : 

In  compliance  with  one  of  the  regulations  of  our  society,  I present  for  your 
consideration,  as  my  mite  of  contribution  to  our  public  labors,  the  following 
essay,  to  prove  the  importance  and  necessity  of  establishing  in  the  United 
States  a National  circulating  medium,  issued  by  the  authority  of  the  General 
Government,  and  based  upon  its  good  faith.  This  is  a subject  of  such  vast 
importance,  by  the  influence  which  just  or  erroneous  opinions  respecting  it 
may  have  on  the  destinies  of  this  rising  Republic,  that  few  can  be  submitted 
to  this  Institute  which  demands  more  their  calm  and  unbiassed  deliberation. 
It  yields  only  in  importance  to  the  great  subject  of  deliberation,  wrhich  con- 
stituted the  labors  of  the  sages  in  the  Convention  of  1787,  when  the  Consti- 
tution was  formed.  For  it  is  in  vain  that,  by  our  political  institutions,  life, 
liberty,  and  the  pursuit  of  happiness,  are  secured,  if,  from  prejudice  or  mis- 
taken policy,  the  means  by  which  alone  industry  can  be  called  into  action,  and 
the  prosperity  of  the  nation  promoted,  are  withheld.  In  standing-  forth  as  an 
advocate  for  the  adoption  of  a National  Currency,  and  in  maintaining  its  claim 
to  superiority  over  a circulating  medium  consisting  of  the  precious  metals,  or 
of  bank  notes  professedly  based  on  them,  I am  sensible  of  the  prejudice  with 
which  I shall  be  assailed,  and  of  the  deep-rooted  errors  which  I shall  have  to 
encounter.  The  bare  mention  of  a paper  currency,  I know,  raises  up  a host 
of  terrors  in  the  minds  of  the  timid,  or  of  those  who  are  unable  or  unwilling 
to  discriminate  between  a currency  issued  and  enforced  by  the  bayonet,  du- 
ring the  convulsions  of  a revolution^  insurgents,  (who  had  neither  power  to 
impose  taxes,  or  any  security  to  offer  for  its  ultimate  liquidation,)  and  the  one 
I propose  to  be  issued  by  the  constitutional  authority  of  Congress,  whose  faith 
ha»  been  preserved  inviolate.  Fortified  as  I am  by  the  authority  of  some  of 
the  ablest  writers  on  political  economy,  whose  opinions  I shall  produce  to  cor- 
roborate my  own  reasoning,  I enter  upon  the  performance  of  the  task  which 
I have  assigned  to  myself,  with  a confidence  of  silencing  the  clamors  which 
have  been  raised  against  a National  Currency,  and  in  removing  all  the  appre- 
hensions which  are  entertained  respecting  it — happy,  thrice  happy,  in  the 
belief  that  I shall  be  able  to  impart  that  conviction  to  the  minds  of  others, 
which  reading,  experience,  and  reflection,  have  so  strongly  impressed  on 
my  own. 

I trust  that  no  apology  need  be  offered  for  making  a question  connected 
with  political  economy,  the  subject  of  an  address  to  the  Columbian  Institute. 
I am  aware  that,  hitherto,  similar  institutes  to  ours  have  been  established  for 
the  exclusive  purpose  of  promoting  the  investigation  of  the  laws  of  matter. 
Until  within  the  last  few  years,  political  economy  consisted  of  little  more  than 
a confused  mass  of  conflicting  opinions  ; the  principles  of  it  have  now  been 
accurately  defined,  and  it  claims  a co-equality  of  rank  with  any  of  the  physi- 
cal sciences. 

From  an  ignorance  of  the  truths  of  political  economy,  “ the  whole  native 
vigor  of  a State,”  says  Dr.  Brown,  “ may  be  kept  down  for  ages,  and  the 


65 


comfort  and  prosperity  and  active  industry  of  unexisting  millions  be  blasted 
by  regulations,  which,  in  the  intentions  of  their  generous  projectors,  were  to 
stimulate  those  very  energies  which  they  repressed,  and  to  relieve  that  very 
misery  which  they  rendered  irremediable.”  The  study,  therefore,  of  a science 
which  has  so  important  an  influence  in  promoting  the  happiness  of  man,  is 
justly  entitled  to  the  encouragement  of  a philosophical  institution. 

1 . All  writers  on  political  economy  concur  in  opinion,  that  the  prosperity  of 
a nation  arises  from  the  accumulation  of  capital.  It  is  to  this  that  society  is  in- 
debted for  a change  from  a state  of  barter  and  concomitant  indigence,  to  the 
state  of  affluence  which  modern  civilized  nations  exhibit.  The  following  ex- 
tract from  the  enlightened  treatise  of  McCulloch,  illustrates  the  truth  of  this 
position  in  such  beautiful  and  forcible  terms,  that,  although  copious,  the  inser- 
tion of  it  in  this  place  will  require  no  apology.  “ Ambition  to  rise,  is  the  ani- 
“ mating  principle  of  society.  Instead  of  remaining  satisfied  with  the  condi- 
tion of  their  fathers,  the  great  object  of  mankind,  in  every  age,  has  been  to 
“rise  above  it  5 to  elevate  themselves  in  the  scale  of  wealth  to  continue 

stationary,  or  to  retrograde,  is  not  natural  to  society.  Man,  from  youth, 
“ grows  to  manhood,  then  decays  and  dies  ; but  such  is  not  the  destiny  of 
“ nations.  The  arts,  sciences,  nnd  capital  of  one  generation,  become  the 
“ patrimony  of  that  which  succeeds  them,  and  in  their  hands  are  improved 
“and  augmented,  and  rendered  more  powerful  and  efficient ; so  that,  it  not 
fi  counteracted  by  the  want  of  security,  or  by  other  adventitious  circumstances, 
“ the  principle  of  improvement  would  always  operate,  and  would  secure  the 
**  constant  advancement  of  nations  in  wealth  and  population.” 

“ It  is  to  the  same  principle  that  we  owe  the  discovery  and  improve- 
“ ment  of  machinery.  Mankind  have,  in  every  stage  of  society,  endeavored 
“ to  increase  their  productive  powers,  and  to  improve  their  condition,  by 
“ availing  themselves  of  the  assistance  of  natural  agents,  and  making  them  con- 

'**  tribute  to  the  performance  of  tasks,  which  must  otherwise  have  been  per- 
formed by  the  hand  only.  The  savage  avails  himself  of  the  aid  of  a club 
“ and  a sling  to  facilitate  the  acquisition  of  game  and  to  abridge  his  labor  ; and 
“ the  same,  principle  which  prompted  him  to  resort  to,  and  construct,  these 
“rude  instruments,  never  ceases  to  operate.  It  is  always  producing  some 
“ new  improvement,  and,  in  an  advanced  and  refined  period,  gives  us  ships  for 
“ canoes,  muskets  for  slings,  steam  engines  for  clubs,  and  cotton  mills  for  dis- 
'* tails.  ‘The  hand  of  man5  says  Colonel  Torrens,  ‘is  not  armed  with  any 
“ efficient  natural  instrument,  such  as  the  beak  of  the  bird  or  the  claw  of  the 
“ quadruped,  for  operating  directly  upon  the  materials  presented  to  him  ; but 
“ it  is  admirably  adapted  for  receiving  and  applying  artificial  implements,  and 
“ for  employing  the  powers  of  one  substance  to  produce  the  desired  change 
“ in  another.  Hence,  almost  all  the  grand  fresults  in  manufacturing  industry 
“ are  brought  about  by  means  of  capital.  Throughout  the  world  there  are  no 
“ striking  inequalities  in  the  muscular  force  by  which  direct  labor  is  perform- 
ed ; and  it  is  merely  owing  to  the  difference  of  capital,  and  in  the  skill  with 
“ which  it  is  supplied,  that,  in  one  country,  a man  is  found  naked  and  destitute, 
“ and  that,  in  another,  all  the  rude  productions  of  the  earth,  and  all  the  forces 
“ of  nature,  are  made  to  contribute  to  his  comfort,  and  to  augment  his 
“power.” 

Whilst  a state  of  barter  exists,  there  can  be  no  accumulation  of  capital ; and 
to  relinquish  barter,  the  employment  of  money  is  essentially  requisite.  This 
was  felt  at  an  early  period  of  society,  and  we  accordingly  find  that  some  medi- 
um of  interchange,  however  imperfect,  has  been  introduced  by  every  nation 
as  it  rose  from  barbarism.  Hence,  in  those  countries  where  a sufficiency  of  the 
precious  metals  could  not  be  obtained,  some  other  media  of  interchange  have 
been  adopted,  such'as  leather,  shells,  (called  couries,)  furs,  brass,  and  iron.  Th  e 
precious  metals,  however,  by  the  tacit  consent  of  the  whole  civilized  world, 
have  been  adopted  as  the  measure  of  value.  In  consequence  of  the  high  va- 
lue they  bear  from  their  scarcity,  a great  sum  may  be  comprised  in  a small 

9 


66 


compass,  and  they  admit,  also,  of  a minuteness  of  subdivision,  which  enables 
them  to  become  the  measure  ©f  a very  low  value.  But  the  principal  reason, 
perhaps,  for  the  preference  given  to  the  precious  metals,  has  arisen  from  the 
additional  value  imparted  to  them  by  the  authority  of  Government,  in  coining 
and  stamping  them.  Furs,  iron,  and  brass,  when  used  as  a medium  of  inter- 
change, nay,  even  the  precious  metals,  would  require  to  be  weighed,  and  their 
purity  ascertained  ,*  but,  in  the  shape  of  coins,  they  are  received  readily,  by 
the  impress,  from  hand  to  hand,  at  the  value  assigned  to  them,  and  at  which 
they  are  received  in  the  public  treasury. 

It  were  superfluous,  I trust,  to  expatiate  upon  the  advantages  and  necessity 
of  money.  Baron  Storch,  who  has  published  six  volumes  on  political  economy, 
under  the  auspices  of  Alexander,  the  Emperor  of  Russia,  denominates  money 
*(  the  marvellous  instrument  to  which  we  are  indebted  for  our  wealth  and  civili- 
zation.” It  fulfils  a higher  purpose  than  merely  forming  a convenient  measure 
of  value  ; it  creates  the  desire  and  means  of  accumulation,  by  which  industry  is 
stimulated,  and  economy  promoted.  It  has  introduced  into  society,  also,  the  re- 
lation of  debtor  and  creditor,  by  establishing  a price  or  interest  for  its  use,  by 
which  the  rich  are  induced  to  aid  the  genius,  enterprise,  and  industry  of  oth- 
ers, who  want  the  funds  to  establish  their  inventions  and  improvements.  Thus, 
the  truth  is  become  apparent,  that  money  is  not  merely  the  effect,  but  also  the 
cause,  of  wealth.  Hence,  it  is  not  only  essential  that  money  should  exist, 
but  that  it  should  also  be  constantly  augmenting  in  quantity  proportionate  to  the 
progress  of  society  in  population  and  circulands.  Before  the  discovery  of 
America,  which  caused  an  annual  influx  of  the  precious  metals  into  Europe, 
society  had  been  stationary  for  more  than  five  preceding  centuries.  The  feu- 
dal system  prevailed  in  full  possession  of  all  the  power  which  it  had  so  long  ex- 
ercised in  darkening  the  intellect,  and  in  impeding  the  advancement  of  man- 
kind ; and,  but  for  this  fortunate  event,  it  might  have  existed  to  this  day.  Un- 
der that  system,  society  was  composed  of  a few  Baronial  Chieftains,  and  a nu- 
merous train  of  dependent  vassals,  very  little  elevated  above  colonial  slaves. 
The  former,  living  in  solitary  grandeur,  and  possessing  no  means  of  saving  and 
of  accumulating,  after  expending  as  large  a portion  as  possible  of  their  reve- 
nue which  consisted  in  kind  in  lavish  profusion,  in  maintaining  their  pomp  and 
dignity,  left  the  remainder,  like  offal,  to  their  menial  vassals,  to  be  consumed 
with  equal  prodigality.  Thus,  the  produce  of  every  year  was  consumed.  The 
obvious  consequence  of  the  augmentation  of  money,  by  the  discovery  of  the 
mines  of  America,  was  the  abolition  of  this  servile  dependence  ; a class  of  ar- 
tisans, of  merchants,  and  of  inhabitants  of  towns,  composing  an  independent 
middle  class,  arose  ; new  markets  and  new  wants  were  created  ; and  a new  era 
in  the  progress  of  Europe  takes  date  from  this  event.  Such  is  the  effect  of 
an  augmenting  circulating  medium. 

Adam  Smith  does  not  appear  to  have  been  sensible  of  this  consequence 
from  the  discoveiy  of  America  ; he  acknowledges  the  influence  of  this  disco- 
very in  promoting  the  wealth  of  Europe,  but  refers  it  to  various  other  causes 
connected  with  it.  The  powerful  cause,  the  augmentation  of  money,  in  com- 
parison with  which  those  which  he  has  enumerated  had  an  inconsiderable  in- 
fluence, has  entirely  escaped  his  notice.  Mr.  Hume,  however,  in  his  chapter 
on  money,  attributed  all  these  improvements  to  the  proper  cause — the  con- 
stant increase  of  the  circulating  medium. 

But,  notwithstanding  this  vast  augmentation  of  the  precious  metals,  it  was 
soon  found  that,  after  deducting  the  home  consumption  in  manufactures,  and 
the  exportation  to  Asia,  the  remainder  was  insufficient  to  supply  the  wants 
which  the  accumulating  capitals  and  industry  of  the  civilized  world  required. 
It  therefore  became  necessary  to  adopt  some  expedient  by  which  the  circulat- 
ing medium  should  be  made  to  keep  pace  with  the  wants  of  a progressing 
society. 

This  was  effected  by  the  introduction  of  paper  money,  convertible  into 
specie  on  the  demand  of  the  holder,  and  circulated  through  the  medium  of 
banking  associations,  which  now  began  to  be  generally  instituted  in  all  the 


67 


commercial  States  of  Europe.  These  were,  at  first,  productive  of  the  most 
beneficial  effects,  by  the  stimulus  to  industry  which  the  augmentation  of  the 
circulating  medium  imparted.  Thus,  the  establishment  of  banks  and  the  em- 
ployment of  paper,  in  the  form  of  notes  and  of  bills  of  exchange,  produced 
another  era  in  the  advancement  of  Europe.  The  evils  inherent  in  banks  I 
shall  presently  point  out ; but  the  advantages  of  them,  which  I have  just  allud- 
ed to,  have  been  acknowledged  by  Adam  Smith,  and  by  all  succeeding  writ- 
ers. They  were  also  introduced  into  this  country,  at  a very  early  period  of 
our  history,  with  equal  advantages.  Dr.  Franklin,  speaking  of  a work  entitled 
by  him,  “ On  the  Nature  and  Necessity  of  a Paper  Currency  ” remarks:  “ The 
“ utility  of  this  currency  became,  by  time,  so  evident,  that  the  principles  on 
“ which  it  was  founded  were  never  afterwards  much  disputed;  so  that  it  grew 

soon  to  £55,000,  and,  in  1759,  to  £86,000;  trade,  building,  and  inhabitants, 
“ all  the  while  increasing.”  Experience,  however,  soon  proved  that  a more 
adequate  and  uniform  currency  than  that  which  they  were  the  instruments  of 
circulating,  was  required  by  the  progressive  wealth  of  modern  nations. 

England,  when  her  industry  had  raised  her  to  be  the  workshop  and  banking 
house  of  the  world,  discovered  this  important  truth.  The  currency  issued  by 
a bank  is  liable  to  even  greater  fluctuations  than  specie.  In  prosperous  pe- 
riods, they  give  extensive  credits  to  individuals,  who,  relying  upon  a continu- 
ance of  them,  are  induced  to  enter  upon  extensive  improvements,  which  re- 
quire time  to  complete.  Should,  however,  by  a fall  of  domestic  price,  or  by 
a failure  of  crops,  or  by  any  other  circumstance,  an  unfavorable  balance  of 
trade  ensue,  by  which  specie  is  withdrawn  from  the  country,  the  banks,  in  self 
defence,  are  necessitated  to  resort  to  ruinous  curtailments,  at  a period  when, 
more  than  at  any  other,  their  aid  would  be  most  beneficial ; and  the  unfortu- 
nate debtors  find  their  hopes  blasted,  their  improvements  sacrificed  at  forced 
sales,  when  purchasers  are  diminished  in  number  and  ability,  by  the  very  mea- 
sures adopted  by  the  banks  for  their  own  security.  The  energies  of  the  na- 
tion are  enfeebled,  precisely  at  the  period  when  they  ought  to  be  stimulated. 
The  evil  is  aggravated  by  the  banks  issuing,  in  some  instances,  more  than  five 
times  the  amount  of  specie  they  possess ; so  that,  for  every  sum  of  specie 
withdrawn,  notes  to  five  times  the  amount  must  be  called  in.  No  person  can, 
with  confidence,  rely  upon  a continuance  of  credit  for  more  than  sixty  days  ; 
thus,  farmers,  manufacturers,  and  other  classes  of  the  community,  can  only 
have  a temporary  benefit.  [See  Mr.  Crawford’s  statement — post.] 

Another  evil  from  banks,  as  now  constituted,  consists  in  them  liability  to 
failure,  from  the  mismanagement  or  corruption  of  the  directors.  How  fre- 
quently they  have  occurred,  we  have  all  witnessed,  and  the  extent  of  ruin  they 
have  thereby  occasioned.  In  England,  country  banks  are  without  charters, 
and  responsible,  jointly  and  individually,  for  their  engagements ; there  is, 
therefore,  a surer  guarantee  for  their  prudence  and  integrity. 

By  granting  charters  to  banks,  the  Government  deprives  itself  of  the  exer- 
cise of  the  undoubted  and  profitable  right  of  coinage.  By  permitting  banks 
to  issue  bills  of  credit,  for  a circulating  medium,  it  yields  to  private  individuals 
that  profit  which  belongs  to  the  Public. 

Mr.  John  Taylor,  of  Caroline,  an  author  of  celebrity,  had  a just  idea  of  the 
preference  due  to  a national  circulating  medium,  as  will  appear  from  the  fol- 
lowing extracts  from  his  luminous  work,  entitled  “ Inquiry  into  the  Principles 
and  Policy  of  the  Government  of  the  United  States ,”  under  the  head  of  “ Bank- 
ing.” 

“ Pennsylvania,  whilst  a province,  became  a banker.  It  made  and  loaned  a 
paper  currency,  at  a moderate  interest.  The  differences  between  the  Penn- 
sylvania and  the  present  mode  of  banking,  are,  that  then  the  tax  (interest) 
was  paid  by  individuals  to  the  Public  ; now,  it  is  paid  by  the  Public  to  indivi- 
duals. Then,  it  was  paid  to  assist  industry,  and  defray  Public  expenses ; now, 
to  enrich  idleness,  and  supply  the  means  of  luxury  to  separate  interest ; then, 
the  Public  required  a knowledge  of  the  amount  paid,  from  its  own  representa- 
tives ; now,  it  pays  an  unknown  amount  to  corporations  in  which  it  is  not  re- 


68 


presented  ; then,  the  Public  received  five  or  six  per  centum  of  individuals,  for 
paper  currency  ; now,  it  pays  ten  or  twelve  per  cent,  to  individuals.  That 
species  of  paper  currency  could  not  corrupt  legislators  or  nurture  aristocracy; 
this  must  do  both  That,  being  dealt  out  by  the  Public  interest,  and  not  by 
the  interest  of  a monopoly,  circulated  through  a nation  like  coin,  liable  to  no 
artificial  fluctuation  ; this,  being  regulated  by  a separate  interest,  is  made  to 
cause  prices  to  fluctuate,  with  a view  to  personal  and  local  employment.  ” 

“ National  credit  includes  the  credit  of  every  individual ; a part  cannot  be 
more  solid  than  the  whole,  if  the  whole  be  lost ; a calamity  which  threatens  to 
overwhelm  a nation,  destroys  confidence  among  individuals.  Bank  credits 
depend  upon  bonds,  given  by  individuals.  Pennsylvania  credit  was  supported 
by  the  same,  and  by  additional  guarantees  of  landed  security  and  national 
faith.  A nation  will  defend  its  own  credit  with  more  animation,  whilst  it  di- 
minishes their  taxes  by  bringing  them  revenue,  than  it  will  bank  credit,  which 
increases  their  taxes.  National  credit  will  arouse  bravery,  interest,  and  pa- 
triotism, like  other  property.” 

The  necessity  that  banks  are  under  of  suspending  specie  payments  in  times 
of  difficulty,  and  the  evils  which  a sudden  return  to  specie  produces,  consti- 
tutes the  principal  objection  to  these  specie-promising  institutions.  The  fol- 
lowing reasons  will,  I trust,  satisfy  every  one  that  we  cannot  rationally  expect 
a sufficient  quantity  of  specie  in  this  new  world. 

1st.  Assuming  for  my  datum,  that  the  quantity  of  specie  required  in  Great 
Britain  is  £30,000,000,  for  a population  of  15,000,000,  or  £2  sterling  per 
head  ; and  supposing  that  the  amount  required  for  the  United  States  be  only 
$5  per  head  ; in  twenty-three  years,  when  our  population  shall  have  increased 
to  24,000,000  (being  now  12,000,000)  the  specie  required,  if  the  present  im- 
perfect currency  be  continued  in  use,  must  amount  to  $120,000,000. 

2d.  The  consumption  of  gold  and  silver,  in  the  variety  of  ways  they  are  used 
in  manufactures,  is  stated  by  Lowe  to  be,  in  Great  Britain,  £1,500,000  per  an- 
num ; if  our  consumption  should  only  equal  two-thirds  of  that  sum,  it  will 
amount,  in  twenty-three  years,  to  150,000,000. 

3d.  The  payment  of  our  debts  abroad,  amounting,  according  to  Mr.  Ma- 
thew Carey,  to  fifty-five  millions  of  dollars,  will  prevent  so  much  specie  from 
being  brought  in  by  a favorable  balance  of  trade,  whenever  it  may  occur. 

4th.  There  must  be  an  export  of  specie  to  Asia,  for  tea  and  for  other  arti- 
cles, the  consumption  of  which,  in  Great  Britain,  is  stated  at  nine  millions  ster- 
ling, annually. 

Lastly.  Wars,  failures  of  crops,  falls  of  prices,  may  ensue  in  twenty  years, 
to  prevent  an  influx  of  specie ; and  at  these  periods,  specie  is  always  hoarded, 
when  most  wanted  ; even  now,  with  our  population  so  small,  when  compared 
with  what  it  is  destined  to  be,  we  do  not  acquire  and  retain  a sufficiency  of  the 
precious  metals  ; suffice  it  to  say,  that,  when  our  population  shall,  in  a century, 
have  exceeded  one  hundred  millions,  we  shall  require  more  specie  than  is  now 
estimated  to  be  in  all  Europe. 

1 flatter  myself  that  I have  successfully  proven  that  the  precious  metals 
cannot  serve  as  a circulating  medium,  to  be  exclusively  relied  upon;  and  that, 
however  beneficial  banking  institutions  may  have  been,  on  the  first  establish- 
ment of  them,  they  have,  in  modern  times,  been  productive  of  infinite  mis- 
chief, because  established  on  a fluctuating  basis ; and  that  a currency,  to  be 
good,  ought  to  be  independent  of  the  precious  metals  as  much  as  possible. 

I proceed,  then,  to  propose  the  adoption  ot  a currency  possessing  this  cha- 
racter, founded  on  the  secure  basis  of  the  property  of  the  nation,  (which,  in 
Great  Britain,  is  eighty  times  more  than  the  specie,)  and  on  the  credit  of  the 
Government ; which  shall  be  so  regulated  as  never  at  any  time  to  exceed,  or 
to  be  below,  the  wants  of  the  community,  and  which,  consequently,  will  be 
free  from  all  those  destructive  fluctuations  incident  to  a paper  currency  entirely 
dependent  on  the  precious  metals.  In  the  United  States,  the  specie,  I esti- 
mate to  be  in  the  proportion  of  1 to  420  in  circulands. 

I propose,  1st,  That  a National  Board  shall  be  constituted,  to  be  composed 


69 


of  three  or  five  persons,  in  addition  to  the  Secretary  of  the  Treasury,  who 
shall  be,  ex  officio.  President  of  the  Board,  with  the  power  of  forming-  and  of 
issuing  (according  to  acts  of  Congress  making  appropriations  thereof,)  national 
notes  of  the  denomination  of  five  dollars  and  upwards. 

2d.  That  these  notes  shall  be  receivable  in  all  payments  to  the  Govern- 
ment, such  as  of  duties,  taxes,  postage,  land,  &c. 

3d.  The  Treasury  Department  to  create  a four  per  cent,  stock,  equal  to  the 
amount  of  the  notes  required  to  be  issued,  to  be  delivered  to  those  holders  of 
national  notes  who  may  apply  to  convert  them  into  these  stocks,  and  the  notes, 
thus  returned,  to  be  at  all  times  given  for  the  same  four  per  cent,  stock,  when 
presented  to  be  exchanged. 

4th.  The  Board  to  make  a report  annually  to  the  Secretary  of  the  Treasury, 
setting  forth  the  amount  of  notes  issued  under  the  different  appropriations  by 
laws  of  Congress,  the  amount  returned  and  converted  into  stock,  the  amount 
of  stock  received  for  notes,  and  such  other  information  as  may  be  required  of 
them,  or  which  they  may  deem  interesting,  which  report  shall  be  laid  before 
Congress  by  the  Secretary  of  the  Treasury,  with  such  accompanying  observa- 
tions as  he  may  think  proper. 

Having  thus  given  a brief  exposition  of  my  plan,  without  entering  into  its 
various  details,  I now  proceed  to  show,  not  only  the  advantage,  but  the  ne- 
cessity of  its  adoption  in  the  United  States.  I would  first  remark,  that  the. 
employment  of  a circulating  medium,  unconnected  with  specie,  is  no  novel 
experiment ; but  that  it  has  been  tried,  both  in  this  country  and  in  England, 
with  the  most  signal  success.  In  the  year  1797,  the  Bank  of  England  was 
ordered  by  the  Privy  Council  to  suspend  specie  paj  ments,  almost  all  the  spe- 
cie having  vanished.  At  first,  this  measure  produced  a general  panic,  and  a 
dreadful  convulsion  was  apprehended.  It  was  feared  the  operations  of  Go- 
vernment would  cease  by  the  mutiny  of  the  Army  and  Navy  for  want  of  pay  : 
that,  for  the  same  reason,  workmen  would  refuse  to  labor  ; and  that  the  whole 
industry  and  resources  of  the  nation  would  be  annihilated.  These  groundless 
terrors,  however,  were  of  short  duration.  The  good  sense  of  the  nation  soon 
prevailed.  They  asked,  44  Are  we  ruined  because  a few  guineas  have  disap- 
“ peared  ? Is  the  wealth  of  Great  Britain,  produced  by  centuries  of  labor,  and 
“ estimated  at  £2,300,000,000  stlg.  to  be  identified  with  a small  quantity  of 
“ specie  which  circulates  in  the  nation  ? Is  all  our  wealth  become  extinct  by 
“ the  transportation  of  a small  portion  of  it  as  an  article  of  commerce  ?”  The 
answers  to  these  queries  were  obvious,  and,  with  one  voice,  they  exclaimed, 
“We  will  receive  the  Bank  of  England  notes  with  the  same  confidence  as  be- 
“ fore  ; for  they  are  founded  upon  the  property  and  good  faith  of  the  nation.’’ 
The  alarms  of  the  day  were  thus  immediately  dissipated.  This  measure  re- 
lieved the  necessities  of  the  community ; the  Bank  was  enabled  to  extend  its 
issues  ; the  industry  of  the  manufacturer,  the  enterprises  of  the  merchant, 
were  aided  ; confidence  took  the  place  of  despondency  ; and  Great  Britain, 
after  a momentary  fall,  rose,  like  Antaeus,  with  renovated  strength.  The  im- 
portant truth  was  disclosed,  that  the  prosperity  of  a nation  was  not  dependent 
on  a mere  article  of  commerce,  and  subject,  like  every  other  one,  to  the  same 
fluctuations.  The  effect  of  this  measure  is  thus  described  by  Percival,  Chan- 
cellor of  the  Exchequer  : 

“ A war  for  existence  was  then  pending  ; the  three  per  cents,  had  fallen 
“ from  ninety-eight  to  forty-eight,  and  all  the  property  of  the  nation  had  de- 
“ dined  in  the  same  proportion  ; so  that  individuals  possessing  property,  in 
“ 1793,  had  their  fortunes  reduced  more  than  half.  The  nation  found  imme- 
4 * diate  relief  from  this  measure.”  He  afterwards  observes,  “It  is  equally 
“ consolatory  and  flattering  to  the  English  nation,  and  no  less  true,  that  we 
“ have  overcome  these  alarming  dangers  which  the  predictions  of  certain  per- 
“ sons  announced  in  1797,  on  account  of  suspension  of  payment  in  specie. 
“ The  nation  has  obtained,  since  1797,  a greater  degree  of  internal  prosperity 
“ and  external  force,  than  at  any  preceding  period.” 

Lord  Castlereagh,  subsequently  to  this,  observed,  “In  this  war,  whilst 
“ our  exertions  by  land  and  sea  have  in  extent  surpassed  all  former  efforts,  the 


70 


“ country  has  risen  in  manufactures,  internal  improvement,  revenue,  and  com- 
“ merce,  with  a velocity  which  has  never  been  experienced  in  a period  of  pro- 
“ found  peace.  In  the  American  war,  its  inevitable  termination  might  be 
**  calculated  from  the  decline  of  our  resources  : in  this  war,  we  feel  that  our 
“ resources  are  augmenting,  and  that  there  is  no  necessary  limit  to  our  exer- 
“ tions  in  point  of  time,  so  long  as  the  injustice  of  the  enemy  shall  leave  us  no 
“ other  rational  choice  but  perseverance  in  the  contest.  What  is  this  owring 
“ to  ? Principally,  to  the  Bank  being  enabled  to  do  its  duty  by  the  country, 
“ instead  of  ruinously,  (I  mean  as  far  as  concerns  the  interests  of  the  Public,) 
“ at  every  moment  of  temporary  pressure  or  alarm,  contracting  its  issues  to 
“ protect  the  establishment  itself  from  being  drained  of  gold  ; they  are  ena- 
“ bled  to  support  public  credit  with  a steady  hand  ; the  productive  labor  of 
“ the  country,  which  is  its  true  and  only  wealth,  is  not  only  kept  up,  but  ena- 
“ bled  to  extend  itself ; the  taxes  are  collected  with  facility,  the  loans  are  rais- 
“ ed  on  moderate  terms,  and  the  whole  machine  proceeds  without  betraying  a 
“ symptom  of  decline.” 

In  further  confirmation  of  the  opinions  entertained  in  England  with  regard 
to  the  beneficial  result  of  the  suspension  of  specie  payment,  I will  quote  the 
observations  of  Arthur  Young,  well  known  throughout  Europe  and  this  coun- 
try, as  a practical  observer,  and  whose  judgment  was  proof  against  all  the  se- 
ductions of  theory  and  hypothesis  ; and  the  observations  of  Grey,  one  of  the 
most  approved  writers  on  political  economy  of  modern  times,  and  who  has 
shed  new  light  on  the  science. 

Arthur  Young  remarks,  “The  average  of  bills  for  enclosing  wastelands 
“ and  commons,  passed  in  Parliament  for  seven  years,  from  1769  to  1775,  was 
“ fifty-eight.  The  average  for  the  next  fourteen  years,  during  the  American 
“ war,  was  only  thirty  five  ; but,  in  the  seven  years  from  1790  to  1796,  the 
“ average  was  fifty -two  ; but,  in  the  following  seven  years,  ending  with  1803, 
“ the  stoppage  of  cash  payments  at  the  Bank  not  only  dissipated  the  accumu- 
“ lated  terrors  of  the  year  nr9ir,  aiumaicJ  o-c ry  exertion,  and  gave  an 

“ average  of  the  seven  years  of  eighty-three.  If  this  does  not  prove  the  con- 
“ version  of  paper  into  beef  and  mutton,  butter,  cheese,  and  corn,  I shall  be 
“ at  a loss  to  know  how  gold  itself  ever  experienced  a clearer  conversion  from 
ft  useless  metal  into  these  most  necessary  of  all  commodities.  I have  been 
ft  long  convinced  that  the  success  of  the  national  agriculture,  and  even  the 
“ subsistence  of  the  People,  have  materially  depended  on  the  paper  circulation 
ft  of  the  kingdom,  and  that,  greatly  lessening,  it  would  shortly  tend  to  ruin 
•t  the  farmers  and  starve  the  people.” 

Mr.  Grey,  after  expatiating  upon  the  instantaneous  enriching  influence  of 
paper  money,  and  after  corroborating  his  reasoning  with  numerous  exhilarat- 
ing facts,  concludes : “ Our  Government,  our  legislature,  our  merchants, 
ft  should  rise  above  the  prejudices  of  poor  and  unenlightened  times,  despise 
ft  the  declamations  of  the  ignorant  or  ill  designing,  and  examine  facts  for 
ft  themselves.  Britain  has  long  led  the  way  in  all  the  improvements  of  com- 
ft  merce ; they  ought  to  make  her  lead  the  way  in  this  important  one,  and 
ft  show  other  nations  that  she  first  knew  the  true  nature  of  home  money,  and 
« first  adopted  measures  that  naturally  spring  from  such  a knowledge  ; she 
*t  will  no  longer  clog  her  commercial  transactions  by  a connexion  between 
t*  paper  and  metal  money,  which  can  only  tend  to  counteract  the  enriching 
“ and  improving  effects  of  the  former  ; but  leave  it  to  be  regulated,  as  it  ought 
ft  to  be,  entirely  by  the  demand.  The  restriction  (of  specie  payments)  pre- 
ff  vents  the  impoverishing  connexion ; it  ought,  therefore,  to  be  continued, 
“ and  not,  as  a temporary  regulation,  extended  from  time  to  time,  unless,  per- 
“ haps,  to  enforce  what,  however,  does  not  seem  to  be  wanted,  an  attention 
«« to  prudence.  The  regulating  power  of  the  demand  is  indeed  sufficient ; 
*f  and  in  order  to  promote  the  issue  of  paper  money,  to  the  full  amount  of  the 
ft  home  exchanging  circuland,  exclusive  of  that  called  change,  it  ought  to  be 
“ left  to  the  National  Banks  to  sell  gold  by  weight,  for  their  notes  only,  when 
“ it  suited  their  conveniency.  This  should  be  a standing  law  in  money,  with 
* * us,  as  long  as  we  are  a nation.” 


71 


The  following  are  the  remarks  of  a writer  of  equal  authority  ; Mr.  Thorn 
ton  says,  “ Any  very  great  and  sudden  diminution  of  Bank  of  England  notes, 
“ would  be  attended  with  the  most  serious  effects,  both  on  the  Metropolis  and 
“the  whole  Kingdom  : a reduction  of  them,  which  may  seem  moderate  to 
“ men  who  have  not  reflected  on  the  subject,  a diminution,  for  instance,  of 
“ one-third  or  two-fifths,  might  perhaps  be  sufficient  to  produce  a very  gene- 
ral insolvency  in  London,  of  which  the  effect  would  be,  the  suspension  of 
“ confidence,  the  derangement  of  commerce,  and  the  stagnation  of  manufac- 
tures throughout  the  country.  Gold,  in  such  case,  would  unquestionably 
“ be  hoarded,  through  the  great  consternation  which  would  be  excited  ; and 
“ it  would  probably  not  again  appear  until  confidence  should  be  restored  by 
“the  previous  introduction  of  some  additional  or  some  new  paper  circul- 
ation.”— Again  : 

“ The  case  which  has  been  put,  is  merely  hypothetical  : for  there  is  too 
“ strong  and  great  an  interest,  in  every  quarter,  to  maintain,  in  some  way  or 
“ other,  the  regular  course  of  London  payments,  to  make  it  probable  that  this 
“ scene  of  confusion  should  occur,  or,  even  if  it  should  arise,  that  it  should 
“ continue  ; whether  there  might  chance  to  be  much  or  little  gold  in  the 
“ country,  steps  would  be  taken  to  induce  the  Bank  to  issue  the  usual  quan- 
“ tity  of  paper,  or  measures  would  be  resorted  to  for  providing , by  some  other 
“ means , a substitute  for  it” 

Mr.  Thornton  continues  : “ A great  diminution  of  notes  prevents  much  of 
“the  industry  of  the  country  from  being  so  productive  as  it  would  otherwise 
“ be  ; plans  of  commerce  and  of  manufactures,  as  well  as  of  general  improve- 
“ ment,  of  every  kind,  which  had  been  entered  upon,  are  changed  or  sus- 
“ pended.” 

The  testimony  of  other  distinguished  writers  on  finance  might  here  be  pro- 
duced, to  show  the  uniformity  of  opinion  which  prevails  in  England  with  res- 
pect to  the  policy  of  this  measure.  An  able  writer,  under  the  signature  of 
Anti-B ullionist,  remarks,  tK»t  the  propositions  “ that  a.  paper  currency  is  de- 
“ predated  when  it  ceases  to  be  of  equal  value  with  gold  and  silver  ? that  the 
“ suspension  of  specie  payments,  by  the  Bank  of  England,  in  1797,  led  to  a 
“ depreciation  of  its  paper  ; and  that  the  inability  of  a Bank  to  redeem,  that 
“ is,  to  pay  in  specie,  is  the  true  criterion  of  excessive  issues ; were  all  tri- 
“ umphantly  refuted  in  the  discussions  to  which  the  report  of  the  Bullion 
“ Committee  gave  birth,  in  and  out  of  Parliament;  and  are  now,  in  England, 
“ absolutely  exploded.” 

Leaving,  then,  any  further  arguments,  derived  from  the  authority  of  the 
ablest  financiers,  I would  state,  as  an  undeniable  evidence  of  the  beneficial  ef- 
fect of  a suspension  of  specie  payments  in  England,  that,  since  it  was  adopted, 
her  exports  increased  in  the  next  eighteen  years,  between  1797  and  1815, 
from  sixteen  to  forty -four  millions  sterling  * that,  during  the  whole  continuance 
of  this  suspension,  the  price  of  stocks  and  the  rate  of  interest  were  subject  to 
very  slight  variations  ; and  that  the  Government  was  enabled  to  obtain  loans 
of  a larger  amount,  and,  at  the  same  time,  on  more  advantageous  terms,  than 
at  any  former  period.* 

The  ability  which  this  politic  measure  gave  to  the  Bank  of  England  of 
fearlessly  extending  its  issues,  led,  also,  to  the  institution  of  numerous  country 
banks,  insomuch  that  the  number  of  them  more  than  doubled  within  ten 
years,  and,  as  they  were  not  cramped,  as  heretofore,  by  the  fluctuations  to 
which  specie  was  liable,  the  notes  of  the  Bank  of  England  having  now  be- 
come the  basis  of  their  notes,  and  convertible  into  them,  with  the  entire  ac- 
quiescence of  the  public,  they  were  enabled,  in  a like  degree  with  the  Bank 
of  England,  to  extend  their  issues,  and  aid  the  industry  of  the  community 
with  permanent  accommodations.  Prior  to  1797,  of  the  three  hundred  coun- 

* We  must  all  remember,  that  the  United  States,  almost  exempt  from  debt,  borrowed  money 
at  8 per  cent.,  whilst  the  British  Government,  with  a debt  of  about  1 800,000,000,  borrowed  at  5 
per  cent.  A concise  account  of  financial  blunders,  during  the  late  war,  would  be  useful ; the 
greatest  was  a reliance  on  speeie, 


try  banks  which  were  in  England,  above  one  hundred  of  them  failed  ; but, 
since  that  period,  although  the  number  of  them  had  so  greatly  increased,  an 
instance  of  a bank  failing  very  seldom  occurred. 

An  equally  powerful  and  beneficial  effect  was  produced  in  this  country  by 
the  suspension,  by  the  Banks,  of  specie  payments,  which  was  a measure  not 
so  much  of  choice,  but  of  absolute  necessity.  It  is  within  the  knowledge  of 
all  those  whom  I address,  that,  notwithstanding  all  the  privations  which  the 
country  suffered  during  the  war,  from  the  almost  entire  annihilation  of  our 
commerce,  it  never  was  at  any  former  period  in  a more  flourishing  condition — 
manufactures  were  established  on  every  stream — lands,  lots,  and  houses,  were 
doubled  in  value — villages  sprung  up — towns  improved— new  companies  were 
formed  for  canals,  roads,  and  bridges  ; and  the  spirit  of  enterprise  animated 
every  class  of  the  community.  Such  was  the  positively  beneficial  effect  of 
an  incontrovertible  circulating  medium. 

But  the  negative  effects,  if  I may  so  term  them,  of  this  measure,  were  no 
less  important.  But  for  the  ability  which  this  afforded  to  the  Banks,  of  aid- 
ing the  Government  by  loans,  it  could  not  have  carried  on  its  operations  ; the 
army  and  navy  must  have  been  without  pay,  clothing,  or  subsistence,  and  the 
war  must  have  terminated  in  disgrace,  from  the  want  of  resources.  The  Go- 
vernment, it  is  true,  ought  to  have  relied  upon  their  own  credit,  and  have 
issued  a currency  founded  on  that  alone.  But  as  it  condescended  to  solicit 
aid  from  the  petty  Banking  institutions  of  the  country,  it  is  clear  to  the  least 
reflecting  mind,  that  this  aid  could  not  have  been  given,  unless  they  had  been 
released  from  the  restrictions  of  specie  payments.  When,  during  the  close 
blockade  of  our  sea-board  by  the  superior  naval  force  of  the  enemy,  no  article 
of  export  could  elude  their  vigilance,  but  specie,  in  payment  for  foreign  goods, 
which  the  high  price  they  bore  induced  persons  to  smuggle  into  the  United 
States,  it  was  evident  that  the  vaults  of  the  Banks  would  soon  be  emptied,  ex- 
cepting of  those  situated  on  the  frontiers,  where  this  illicit  and  highly  profita- 
ble  commerce  was  carried  on.  It  was  accordingly  found,  that  the  Banks  in 
the  North,  where  this  commerce  prevailed  to  a great  extent,  were  alone  able 
to  withstand  the  shock.  The  others,  less  fortunately  situated,  were  obliged 
to  yield  to  circumstances  ; public  confidence  in  their  solvency  was  not,  fortu- 
nately, thereby  impaired  ; the  industry  of  the  community  was  not  impeded 
by  a withdrawal  of  the  currency  at  that  crisis,  more  than  at  any  other  require 
in g its  augmentation;  and  the  Government  was  enabled  to  bring  a war,  com- 
menced under  circumstances  of  an  entire  want  of  preparation,  to  an  honora- 
ble close. 

Unhappily,  on  the  return  of  peace,  both  the  General  and  State  Govern- 
ments, regardless  of  past  and  recent  experience,  either  entertained  or  yielded 
to  the  force  of  popular  prejudices  respecting  paper  money,  and  coerced  the 
Banks  to  return  to  specie  payments,  the  suspension  of  which,  during  the 
war,  was  only  regarded  beneficial  as  a temporary  expedient.  The  general 
ruin,  which  was  the  consequence  of  this  precipitate  measure,  would  be  too 
painful  a task  to  present  in  all  its  frightful  details.  Animus  meminisse  horret 
luduque  rcfugit.  I have  contented  myself  with  placing  in  the  Appendix,  the 
appalling  picture  of  distress  drawn  by  the  Philadelphia  Society  for  the  Encou- 
ragement of  Industry,*  and  shall  only,  in  proof  of  the  faithfulness  of  the  deli- 
neations, quote  the  following  remarks  from  the  report  of  the  Secretary  of  the 
Treasury,  for  the  year  1819  : 

“ The  currency  of  the  United  States,  according  to  these  estimates,  has,  in 
“ the  space  of  three  years,  been  reduced  from  11$>  millions  to  45  : This  reduc- 
tion exceeds  fifty-nine  per  cent.  All  intelligent  writers  upon  currency 
“ agree,  that,  where  it  is  decreasing  in  amount,  poverty  and  misery  must  pre- 
tail. The  correctness  of  the  opinion  is  too  manifest  td  require  proof.  The 

* It  was  remarked  by  the  above  mentioned  Society,  that  handicraft  traders  suffered  less,  by  a 
diminution  of  currency,  than  manufacturers  with  machinery.  The  reason  is  obvious.  The 
former  employ  few  workmen,  and  do  not  require  large  capitals  : the  latter  employ  many  hands, 
have  to  purchase  large  quantities  of  raw  materials,  and  give  large  credits  to  retailers,  who, 
by  not  being  punctual,  cause  embarrassments, 


75 


<f  united  voice  of  the  nation  attests  its  accuracy.  As  there  is  no  recorded  er- 
“ ample  in  the  history  of  nations,  of  a reduction  of  the  currency  so  rapid  and  so 
“ extensive,  so  but  few  examples  have  occurred  of  distress  so  general  and 
“ severe  as  that  which  has  been  exhibited  in  the  United  States.” 

The  President  of  the  United  States,  in  his  message  to  Congress,  anticipating 
the  inevitable  consequences  which  would  ensue  from  the  adoption  of  so  rash 
and  violent  a measure,  suggested,  “ That  it  may  become  necessary  to  ascer- 
“ tain  the  terms  on  which  the  notes  of  Government  (no  longer  required  as  an 
“ instrument  of  credit,)  shall  be  issued,  upon  motives  of  general  policy,  as  a 
“ common  medium  of  circulation  and  the  Secretary  of  the  Treasury,  fully 
aware  that  both  policy  and  necessity  might  require  areturn  to  the  suspension  of 
specie  payments,  inserted  a clause  in  the  Act  incorporating  the  Bank  of  the 
United  States,  giving  Congress  the  right  of  permitting  the  Bank  to  suspend 
them  ; this,  however,  was  stricken  out,  as  if  the  Bank  could  regulate  com- 
merce, command  high  prices,  produce  abundance,  and  prevent  the  evanes- 
cence of  specie,  that  basis  which  ought  to  have  the  motto  of  hie  et  ubique,  and 
which  always  disappears,  like  a summer  friend,  in  time  of  need. 

In  the  Appendix  will  be  shown  how  the  Bank  of  England,  prior  to  the 
suspension  of  specie  payments,  had  been  run  upon,  and  reduced,  more  than 
once,  to  issuing  six  per  cent,  notes,  instead  of  money.  I have  also  shown  to 
what  extent  the  Bank  of  the  United  States  has  had  its  specie  reduced,  and 
how  it  was  compelled  to  send  stocks  to  England  to  purchase  specie,  which 
were  the  inevitable  consequences  of  such  a fluctuating  basis. 

Having  now,  as  I confidently  believe,  fully  shown  the^advantages  of  a na- 
tional paper  currency,  I come  to  an  explanation  of  my.  proposition.  In  reply 
to  objections  which  may  probably  be  made  to  the  appointment  of  a Currency 
Board,  I give,  in  the  Appendix,  the  great  authority  ^of  Ricardo,  which  must,  I 
think,  be  satisfactory.  The  question  which  arises,  is,  How  shall  these  notes 
be  thrown  into  circulation  ? , • • 

1st.  I think  that  thA.Cnvoi<nmani  of  Otote  aknulj  receive  at  least  to 

the  amount  of  one  dollar  per  head  of  its  population.  • 

2d.  The  General  Governnfent  may  subscribe  one-third  to  the  capital  of  all 
associations  for  canals,  rail-w*ays,  roads,  and  bridges.  ♦ • 

3d.  Congress  may  order  dry  docks,  lighthouses,  and  arterial  roads,  railways, 
and  canals,  and  other  objects  for,  the  general  welfare,  to  be  constructed,  and 
the  payments  therefor  to  be  made  in  these'notes. 

If  it  be  asked.  How  is  the  issue  to  be  limited,  to  prevent  excess  ? I answer, 
it  may  be  limited  to  four  or  five.dollars  per  head,  on  the  population,*  or  to  an 
amount  equal  to  one  year’s' revenue  of  the  ^General  Government  and  State  Go- 
vernments. The  right,  moreover,  of  every  individual  to  convert  the  notes 
into  four  percent,  stock,  will  always  prevent  a superfluity  to  any  considerable 
extent : for,  if  Congress  should  order  the  issue^of  more  notes  than#the  circu- 
lands  require,  the  excess  will  be  absorbed  by  conversion  into  stock.  The 
terse  reply  of  a Director  of  the  Bank  of  England,  who  was  askfd,  " What  is 
the  limitation  of  your  issues,  you  being  relieved*  from  the  restraint  of  specie 
payments  ?”  c<  The  demand ought  to  be  written  in  letters  of  gold ; for,  in 
two  words,  it  constitutes  an  answer  to  this  objection.  There  are  those, who  ima- 
gine that  specie  will  always  come  to  a country  in  need  of  it,  as  water  find  its 
level ; but  this  metaphor  is  misapplied,  and  the  position  is  untrue : for,  if 
wishes  were  horses,  beggars  would  ride.  A quid  pro  quo  must  always  be 
given  for  specie  ; and  when  people  are  thrown  out  of  employ  for  want  of  mo- 
ney, how  can  diminished  industry  produce  a favorable  balance  of  trade  ? 
When  Great  Britain,  by  an  increase  of  bank  paper,  after  its  loss  of  specie, 
augmented  industry,  and  exports,  then,  not  only  it  imported  luxuries,  but 
raw  materials,  and  also  the  precious  metals. 

It  may  be  objected,  that  National  notes,  receivable  in  all  payments  by  the 
General  Government  and  by  State  Governments,  and  convertible  into  stock, 
will  not  be  received  by  banks  and  individuals,  excepting  at  a discount : the 
very  reverse  of  this  was  shown  in  Great  Britain  ; the  Banks  will  be  highly  be- 
aefitted  by  the  National  Currency,  which  will  be  the  basis  of  their  notes,  and 
10 


74 


augment  their  deposites,  and  of  course  the  same  credit  will  be  given  t©; 
these  notes  by  the  public.  But  no  doubt  ought  to  remain  with  regard  to  the 
credit  of  a currency  founded  on  stock,  after  the  successful  experiment  of  the 
Patriotic  Bank,  established  in  this  city,  in  September,  1815.  The  capital  of 
$ 250,000,  was  all  subscribed  in  the  six  per  cent,  stock  of  the  United  States. 
This  Bank  proclaimed,  that  it  would  not  commence  with  the  delusive  promise 
of  redeeming  its  notes  with  specie,  but  that  it  would  redeem  its  notes  with 
Government  stocks,  at  the  price  of  the  day  ; it  assumed  the  name  Patriotic , 
because  it  made  Government  stocks  the  base  of  its  notes,  and  because  it  dis- 
counted at  five  percent.,  when  all  the  other  Banks  demanded  six  per  cent. 
It  also  proclaimed,  that  any  individual  might  ascertain  the  amount  of  the 
stock  standing  in  its  name,  in  the  Treasury,  and  ascertain  from  the  Bank 
books  what  notes  were  in  circulation.  This  open  fairness  obtained  the  Bank 
credit;  and  in  vain  the  specie-promising  banks,  who  had  stopped  payment, 
endeavored  to  oppose  this  interloper  and  innovator ; it  continued  in  high 
credit,  and  circulated  notes  to  the  amount  of  its  capital,  and  no  one  ever  ap- 
plied for  its  stocks  in  exchange  for  its  notes.  It  divided  eight  per  cent.,  and 
its  shares  were  ten  per  cent,  above  par.  Alas  ! it  was  compelled,  in  1817,  to 
receive  a charter,  and  to  pay  in  specie ; it  called  in  four-fifths  of  its  notes,  dis- 
tressed its  debtors,  sold  almost  all  its  stocks,  and  its  shares  depreciated  25  per 
cent,  during  the  general  pressure.  Foreseeing  these  evils,  I resigned  my  seat 
as  Director,  and  lament  that,  what  ought  to  have  remained  an  example  for 
imitation,  was  thus  forced,  by  irresistible  authority,  to  become  a mischievous 
enormity. 

I have  fixed  the  interest  of  the  stocks  into  which  the  national  notes  are  con- 
vertible, at  four  per  cent.,  that  foreigners  may  not  be  induced  to  purchase 
them  and  to  tal^e  them  away. 

It  may  also  be  objected  that  the  facility  which  the  National  Currency  will 
afford  to  the  General  Government,  of  indulging  in  lavish  expenditure,  will  in- 
duce it  to  issue  National  notes  to  an  excess,  and  thereby  cause  a depreciation 
in  the  value  ortneni.  i nave  alicailj'  iLob  (.kv  vvnrcrCibility  Of  them 

into  stock,  and  the  demand  for  them  ceasing,  xyill  always  prove  correctives  t» 
this  evil.  But,  hav^  ye  not  a further  and  a more  complete  security  against  it 
in  the  wisdom  and  integrity  of  the  General  Government  ? We  have  fearlessly 
and  necessarily  confided  to  it  the  «xercise  of  powers  of  equal  importance.  It 
is  the  uncontrollable  guardian  of  the  life  and  liberty  of  the  citizen  ; to  it  is 
entrusted,  without  appeal,  the  determination  of  the  great  questions  of  peaee 
and  was,  of  taxation,  and  of  whatever  relates  to  the  main  objects  for  which  ci- 
vil government  was  instituted.  Have  we  found  that  these  vast  powers  have 
been  abused  ? The  Constitution  of  the  United  States  has  wisely  given  to  the 
General  Government,  and  denied  to  the  State  Governments,  the  right  of 
emitting  bills  of  credit.  Tfie  proof  that  it  has  been  entrusted  to  a safe  depo- 
sitory, is  to  be  found  in  the  fact  that  the  General  Government  has  never  abused 
it,  when  the  temptation  to  do  so  appeared  irresistible.  During  the  late  war,  did 
the  Government  emit  bills  .of  credit  to  excess  ? Did  we  not  see  the  General 
Government,  relying  upon  any  other  credit  but  its  own,  purchasing  the  aid  of 
petty  banking  institutions,  at  usurious  sacrifices,  and  presenting  itself  before 
them  in  the  suppliant  attitude  of  a mendicant  ? If,  under  these  circumstances, 
the  power  of  emitting  bills  of  credit  was  not  abused,  we  have  a sure  guarantee 
that  no  circumstances  can  occur  which  will  tempt  the  Government  to  an  indis- 
creet exercise  of  it.  In  despotic  Governments,  such  an  apprehension  might 
readily  be  entertained.  In  the  United  States,  the  Government  and  the  Peo- 
ple are  one  and  the  same.  In  all  the  transactions  of  life  between  man  and 
man,  mutual  confidence  is  necessary;  more  particularly  is  it  due  to  the  Gene- 
ral Government,  for  the  proper  exercise  of  its  powers.  The  responsibility  of 
the  Government  to  the  People,  has  always,  and  will  always,  prove  a check  to 
the  improper  exercise  of  this,  as  well  as  of  every  other  one.  By  the  plan  pro- 
posed, the  Board  are  required  to  report  annually  to  Congress  a statement  of 
their  proceedings,  and  the  means  are  thus  furnished  of  arresting,  at  its  very 
inception,  any  attempt  to  betray  the  trust  reposed  in  it. 


75 


The  last  objection  which  I shall  notice,  (and  in  so  doing1  I fear  I shall  be 
charged  with  insulting  the  understandings  of  the  enlightened  auditory  that  I 
am  now  addressing,)  is  the  cry  of  mere  witlings — “ Rags  ! Rags  ! ” Was 
not  the  Constitution  the  charter  of  our  liberties,  and  are  not  the  laws  which 
have  emanated  from  it  written  on  paper  ? Would  this  charter,  would  these 
law9  obtain  any  additional  value,  by  being  inscribed  on  tablets  of  gold  ? These 
same  witlings  exclaim,  “ready  rhino  !”  and  talk  of  the  intrinsic  value  of  gold 
and  silver.  Are  they  not,  in  use,  inferior  in  value  to  iron  ? The  stamp  and 
the  value  affixed  by  sovereigns,  by  a common  assent,  as  it  were,  has  given  a 
value  to  the  coins.  Will  the  declaimers  against  rags,  exchange,  at  par,  a 
Government  bond,  bearing  six  per  cent.,  for  one  bearing  only  four  per  cent.  ? 
Should  the  present  rage  for  mining  in  Spanish  America  make  silver  more 
plentiful  than  copper,  would  it  continue  to  answer  for  a circulating  medium 
for  all  nations  ? My  assertion  is,  that  every  nation  ought  to  have  its  own  cir- 
culating medium,  as  every  man  has  his  own  blood  for  his  body.  If  we  had 
twenty  millions  showered  from  Heaven,  in  specie,  it  might  soon  be  sent 
abroad  for  articles  which  we  want ; but  the  same  amount,  in  a home  curren- 
cy, would  always  remain  amongst  us,  vivifying  and  producing  industry.  We 
have  indulged  prejudices  too  long,  and  use  inappropriate  terms,  as  if  inten- 
tionally to  delude  ignorance.  Our  Banks  loudly  talk  of  a sound  currency, 
based  on  gold  and  silver,  which  we  all  own  to  be  articles  of  commerce,  and 
which  have  proved  to  be  (to  use  the  phrase  of  the  Secretary  of  the  Treasu- 
ry,) evanescent.  There  is,  in  truth,  a jargon  which  bewilders  the  senses  of 
many  ; nay,  we  are  almost  deterred  from  all  investigation,  as  a leading  Mem- 
ber of  Congress  has  termed  finance  a modern  Eleusinian  mystery. 

The  introduction  of  the  proposed  National  currency  will  not  exclude  the 
specie  currency,  but  be  a succedaneum,  which  may  always  supply  any  want 
of  currency,  when  specie  is  sent  abroad  for  a profitable  trade,  or  by  an  un- 
favorable balance  of  it. 

This  National  currency  and  specie  may  form  a trio  with  gold  and  silver. 
The  superiority  of  the  National  currency  will  be,  that  fear  will  not  secrete  it, 
avarice  will  not  hoard  it,  and  an  enemy  cannot  withdraw  it  from  the  nation. 

I will  now  proceed  briefly  to  state  some  of  the  benefits  which  will  be  ob- 
tained by  the  adoption  of  the  plan  proposed. 

1st.  It  will  furnish,  both  to  the  General  and  State  Governments,  the  means 
of  carrying  on  Internal  Improvements,  from  which  they  are  now  only  prevent- 
ed by  want  of  money. 

2d.  By  increasing  the  quantity  of  money,  the  rate  of  interest  will  be  redu- 
ced ; the  effect  of  low  interest  is  acknowledged  by  all  writers.  Sir  Joshua 
Child  calls  it  the  soul  of  trade.  Baron  Storch  remarks,  that,  “ as  interest 
“ falls,  productions  are  amplified,  and  a number  of  enterprises  are  successive- 
ly undertaken,  which  one  scarcely  thinks  of.  Thanks  to  low  interest, 
“ agriculture  and  manufactures  employ  greater  capitals,  and  commercdjlpens 
‘ * new  branches,  from  which  it  was  before  excluded  by  high  interest^ and 
“ thus  the  industrious  gain  employ  by  a governmental  measure,  although 
“ not  by  expenditures  for  which  they  would  otherwise  be  taxed.”  In  the 
Appendix,  I have  made  an  attempt  to  calculate  the  amount  of  gain  to  borrow* 
ers,  by  a reduction  in  the  rate  of  interest,  of  one  per  cent. 

3d.  It  will  enable  the  Government  to  buy  its  own  stocks,  without  burthen- 
ing  the  community  with  taxes  for  the  purpose. 

4th.  It  will  facilitate  the  commutation  of  stocks,  now  bearing  a higher  rate 
of  interest,  for  those  which  bear  a lower  interest. 

5th.  It  will  give  an  income,  by  tolls,  on  subscriptions  to  incorporated  com- 
panies ; it  will  prevent  the  unfavorable  balance  of  trade,  which  has  so  long 
* existed  against  this  country,  by  stimulating  industry,  and  by  increasing  ex- 
ports. 

6th.  It  will  enable  Banks,  by  having  a preferable  non-exportable  currency, 
to  extend  both  the  amount  and  the  period  of  their  loans  ; whereby,  not  only- 
will  industry  be  quickened,  but  agriculturists  and  manufacturers  may  safely 


make  permanent  investments  of  capital,  with  a view  to  distant  profits,  with- 
out being  under  the  apprehension  of  sudden  curtailments. 

7th.  It  will  prevent  a fluctuation  in  the  value  of  property,  and  a recurrence 
•f  that  unparalleled  depression  of  it,  which  Mr.  Crawford  has  lamented. 

8th,  and  lastly.  It  will  reduce  the  rate  of  exchange  between  different  sec- 
tions of  our  country  ; because,  these  notes  having  an  uniform  value,  are  pre- 
ferable to  the  precious  metals,  which  cause  delay  and  expense,  and  will  save 
merchants  the  expense  of  purchasing  bills. 

Last  year,  a memorial  for  a National  currency  was  presented  to  Congress  by 
the  direction  of  a numerous  meeting  in  this  city,  which  is  inserted  in  the  Ap- 
pendix. A report  was  not  made  upon  it  by  the  committee  to  whom  it  was 
referred.  Had  they  investigated  the  subject,  and  reported  thereon  to  Con- 
gress, drawing  my  conclusions  from  their  acknowledged  abilities,  I am  confi- 
dent that  not  only  the  United  States,  but  that  all  the  world,  would  have  re- 
ceived a most  important  and  most  inestimable  communication.  (See  Ap- 
pendix, page  31.) 

I indulge  the  belief  that  the  memorial  of  this  year  will  obtain  a more  fa- 
vorable notice ; and  should  Congress  pass  a law,  which  shall  receive  the 
sanction  of  the  President,  for  the  adoption  of  a National  Currency,  what  an 
era  of  prosperity  it  will  establish  ! Canals  across  peninsulas  will  join  oceans  ; 
and  they  will  unite  our  lakes  with  the  Atlantic  sea  ; or,  if  canals  can  only  be 
well  applied  on  a level  surface  of  country,  vessels  can  be  conveyed  over 
mountains  by  fixed  or  locomotive  engines,  on  rail-ways.  In  short,  the  mind  is 
almost  wonder-lost  in  contemplating  the  extraordinary  benefits  which  will 
ensue  from  public  improvements  thus  accomplished. 

To  use  the  impressive  words  of  our  Chief  Magistrate,  “ The  spirit  of  im- 
“ provement  is  abroad  upon  the  earth  ; it  stimulates  the  heart,  and  sharpens 
“ the  faculties,  not  of  our  fellow-citizens  alone,  but  of  the  nations  of  Europe 
“ and  of  their  rulers.”  We  have  had  meetings,  and  speeches,  and  pamphlets ; 
and  surveys,  auj  annually  accumulating  ; 

but  all  will  be  of  little  avail,  without  the  primum  mobile , the  sine  qua  non. 

The  hope  of  witnessing  the  commencement  of  these  important  objects  has 
exerted  my  zealous  efforts,  and  preserved  my  unabating  assiduity.  In  my 
grand  climacteric,  I offer  up  my  prayers  that  the  minds  of  the  Representatives 
of  the  Nation  may  be  enlightened,  and  their  hearts  dilated,  to  make  an  experi- 
ment, whilst  we  enjoy  peace  with  all  the  world. 

Should  the  advocates  of  a National  Currency  be  in  an  error,  they  will  re- 
joice at  its  exposure  ; they  solicit  investigation  and  discussion,  which  elicit 
light ; they  desire  only  the  establishment  of  incontrovertible  principles  t® 
strengthen  our  independence,  to  promote  our  wealth  and  happiness,  and  t® 
cement  the  Union.  This  may  be  termed  the  language  of  enthusiasm  ; it  is 
so  ; and  would  to  God  I could  infuse  my  ardor  into  my  respectable  audience. 
It  is  th^f*rd^ult  of  much  reading,  of  many  deliberations,  and  of  thorough  con- 
victiaw^ 

4 

The  following  Documents  were  appended  to  Mr.  Law’s 
Address  : 

■ % Cavendum  est  ne  consuinpto  asrario  repentina  calamitate  respublica  desera tur. 

DOCUMENTS  IN  FAVOR  OF  A CURRENCY  BOARD. 

FROM  RICARBO. 

“ So  much  has  already  been  written  on  currency,  that  of  those  who  give 
their  attention  to  such  subjects,  none  but  the  prejudiced  are  ignorant  of  its 
true  principles. 

“ While  the  State  alone  coins,  there  can  be  no  limit  to  the  charge  of  seign- 
orage : for,  by  limiting  the  quantity  of  coin  it  can  be  raised  t*  any  conceiva- 
ble value. 


“It  is  on  this  principle  that  paper  money  circulates  ; the  whole  charge  for 
paper  money  may  be  considered  a seignorage.  Though  it  has  no  intrinsic 
value,  yet,  by  limiting  its  quantity,  its  value  in  exchange  is  as  great  as  an 
equal  denomination  of  coin,  or  of  bullion  in  that  coin.  On  the  same  principle, 
too,  namely,  by  a limitation  of  its  quantity,  a debased  coin  would  circulate  at 
the  value  it  should  bear,  if  it  were  of  the  legal  weight  and  fineness,  not  at  the 
value  of  the  quantity  of  metal  which  it  actually  contained. 

“ After  the  establishment  of  banks,  the  State  has  not  the  sole  power  of 
coining  or  issuing  money.  The  currency  may  as  effectually  be  increased  by 
paper  as  by  coin  : so  that  if  a State  were  to  debase  its  mo»ey  and  limit  its 
quantity,  it  could  not  support  its  value,  because  the  banks  would  have  an  equal 
power  of  adding  to  the  whole  quantity  of  circulation. 

“ On  these  principles  it  will  be  seen  that  it  is  not  necessary  that  paper  mo- 
ney should  be  payable  in  specie  to  secure  its  value  ;it  is  only  necessary  that  its 
quantity  should  be  regulated  according  to  the  value  of  the  metal  which  is  de- 
clared to  be  the  standard.  If  the  standard  were  gold  of  a given  weight  and 
fineness,  paper  might  be  increased  with  every  fall  in  the  value  of  gold,  or, 
which  is  the  same  thing  in  its  effects,  with  every  rise  in  the  price  of  goods. 

“ A currency  is  in  its  most  perfect  state  when  it  consists  wholly  of  paper 
money,  but  of  paper  money  of  an  equal  value  with  the  gold  it  professes  to  re- 
present. The  use  of  paper  instead  of  gold  substitutes  the  cheapest  in  place  of 
the  most  expensive  medium,  and  enables  the  country,  without  loss  to  any  in- 
dividual, to  exchange  all  the  gold  which  it  before  used  for  this  purpose,  for 
raw  materials,  utensils,  and  food  ; by  the  use  of  which,  both  its  wealth  and  its 
enjoyments  are  increased. 

“ I have  already  observed,  that,  if  there  were  perfect  security  that  the  pow- 
er of  issuing  paper  money  would  not  be  abused,  it  would  be  of  no  import- 
ance with  respect  to  the  riches  of  the  country  collectively,  by  whom  it  was  is- 
sued ; and  I have  now  shown  that  the  public  would  have  a direct  interest ; 

th^t  tllC  issuers  cliniilrl  I^p  fhp  ftfofp,  npf  o pnmpony  nf  nvofeKanto  aild  bSUlk* 

ers.  The  danger,  however,  is,  that  this  power  would  be  more  likely  to  be 
abused,  if  in  the  hands  of  Government,  than  if  in  the  hands  of  a banking  com- 
pany. A company,  it  is  said,  would  be  more  under  the  control  of  law  ; and 
although  it  might  be  their  interest  to  extend  their  issues  beyond  the  bounds  of 
discretion,  they  would  be  limited  and  checked  by  the  power  k which  indivi- 
duals would  have  of  calling  for  bullion  or  specie.  It  is  argued  that  the  same 
check  would  not  be  long  respected,  if  Government  had  the  privilege  of  issu- 
ing money.  It  is  argued  that  they  would  be  too  apt  to  consider  present  conve- 
nience, rather  than  future  security,  and  might,  therefore,  on  the  alleged 
grounds  of  expediency,  be  too  much  inclined  to  remove  the  checks  by  which 
the  amount  of  their  issues  was  controlled. 

“ Under  an  arbitrary  Government,  the  objection  would  have  great  force;  but 
in  a free  country,  with  an  enlightened  Legislature,  the  power  of  issuing  paper 
money  under  the  requisite  checks  of  convertibility  at  the  will  of  the  holder, 
might  be  safely  lodged  in  the  hands  of  commissioners  appointed  for  the  spe- 
cial purpose,  and  they  might  be  made  totally  independent  of  the  control  of 
Ministers. 

“The  sinking  fund  is  managed  by  commissioners  responsible  only  to  Parlia- 
ment, and  the  investment  of  the  money  entrusted  to  their  charge  proceeds 
with  the  utmost  regularity.  What  reason  is  there  to  doubt  that  the  issues  of 
paper  money  might  be  regulated  with  equal  fidelity,  if  placed  under  similar 
management  ?” 

Picture  drawn  by  the  Philadelphia  Society , for  the  promotion  of  National  In- 
dustry— in  a contrast , as  they  express  themselves , appalling  to  every  friend, 

not  merely  of  this  country , but  of  human  happiness. 

OUR  SITUATION  AT  THE  CLOSE  OF  THE  WAR. 

1.  Every  man,  woman,  or  child,  in  the  nation,  able  and  willing  to  work, 
could  procure  employment. 

2.  We  had  an  extensive  and  profitable  cotton  manufacture  spread  through. 


78 


out  the  Union,  and  producing  above  24,000,000  dollars  annually,  which  might, 
by  proper  encouragement,  have  been  extended  to  50,000,000  in  a few  years. 

3.  This  manufacture  consumed  above  one-fourth  part  of  the  whole  crop  of 
cotton. 

4.  We  had  a capital  vested  in  merino  sheep,  to  the  amount  of  one  million  of 
dollars. 

5.  We  possessed  a valuable  woollen  manufacture,  which  produced  us,  an- 
nually, clothing  to  the  amount  of  nineteen  millions  of  dollars,  and  which 
might  have  been  extended  before  now  to  double  the  amount. 

6.  Almost  all  of  our  manufacturing  establishments  were  fully  and  advantage- 
ously employed. 

7.  Confidence  between  our  citizens  was  general. 

8.  Our  debts  to  Europe  were  fairly  and  honorably  discharged. 

9.  Little,  if  any,  of  our  public  stock,  was  held  in  that  quarter  of  the  globe. 

10.  Money  could  be  easily  borrowed  at  legal  interest. 

11.  Debts  were  collected  without  difficulty. 

12.  Our  character,  as  a mercantile  people,  stood  fair  with  the  world. 

13.  Every  man  who  had  capital  could  find  advantageous  employment  for  it 
in  regular  business. 

14.  The  country  was  generally  prosperous,  except  a few  places  which  had 
suffered  desolation  during  the  war. 

OUR  PRESENT  SITUATION. 

1.  Our  profitable  commerce  nearly  annihilated. 

2.  Our  shipping  reduced  in  value  one  half. 

3.  Of  our  merchants,  a considerable  portion  bankrupt,  and  many  tottering 
on  the  verge  of  bankruptcy.  The  commercial  capital  of  the  country  reduced, 
it  is  believed,  seventy  millions  of  dollars. 

4.  Our  fine?  oofahllchmpntc  in  si  great  measure  suspended,  and  ma- 

ny of  them  falling  to  decay. 

5.  Many  of  their  proprietors  ruined. 

6.  Thousands  of  citizens  unemployed  throughout  the  United  States.  [About 
11,000  in  the  city  of  Philadelphia  have  been  deprived  of  employment.] 

7.  Our  circulating  medium  drawn  away  to  the  East  Indies  and  to  Europe, 
and  to  pay  for  articles  which  we  could  ourselves  furnish,  or  which  we  do  not 
want. 

8.  A heavy  actual  tax  incurred  to  Europe  in  the  interest  payable  on  proba- 
bly 20  or  25,000,000  of  dollars  of  Government  and  bank  stock,  likewise  remit- 
ted in  payment. 

9.  Real  estate  every  where  fallen  thirty,  forty,  or  fifty  per  cent. 

10.  Our  great  staples,  cotton,  flour,  tobacco,  &c.  reduced  in  price  from 
thirty  to  forty  per  cent. 

11.  Our  merino  sheep,  for  want  of  protecting  the  woollen  manufacture,  in  a 
great  measure  destroyed,  and  those  that  remain  not  worth  ten  per  cent,  of 
their  cost. 

12.  Large  families  of  children  become  a burden  to  their  parents,  who  are 
unable  to  devise  suitable  means  of  employment  for  them. 

13.  Numbers  of  our  citizens,  possessed  of  valuable  talents,  and  disposed  to 
be  useful,  but  unable  to  find  employment,  are  migrating  to  Cuba,  where,  un- 
der a despotic  Government,  among  a population  principally  of  slaves,  and  sub- 
ject to  the  horrors  of  the  Inquisition,  they  seek  an  asylum  from  the  distress  they 
suffer  here  ! 

14.  Hundreds  of  useful  artisans  and  mechanics,  who,  allured  by  our  .form  of 
Government,  migrated  to  our  shores,  and  returned  to  their  native  countries,  or 
gone  to  Nova  Scotia  or  Canada,  brokenhearted,  and  with  exhausted  funds. 

15.  Men  of  capital  are  unable  to  find  any  profitable  employment  for  it  in  re- 
gular business. 

16.  Citizens  who  own  real  estate  to  a great  amount,  have  large  debts  due 
them,  and  immense  stocks  of  goods,  cannot  mortgage  their  real  estate,  dispose 
of  their  stocks,  but  at  extravagant  sacrifices,  nor  collect  their  debts. 

17.  Citizens  possessed  of  great  wealth,  have  it  in  their  power  to  increase  it 


79 


immoderately,  by  purchasing  the  property  of  the  distressed,  sold  at  ruinous  sa- 
crifices by  sheriffs,  marshals,  and  otherwise,  thus  destroying  the  equality  of 
our  citizens,  and  aggrandizing  the  rich  at  the  expense  of  the  middle  class  of 
society. 

18.  The  interest  of  money  extravagantly  usurious. 

19.  Distress  and  misery,  to  an  extent  not  to  be  conceived  but  by  those  who 
have  an  opportunity  of  beholding  them,  spreading  among  the  laboring  class  in 
our  towns  and  cities. 

20.  Bankruptcy  and  poverty  producing  an  alarming  increase  of  demoraliza- 
tion and  crime. 

21.  The  attachment  to  our  Government  liable  to  be  impaired  in  the  minds 
of  those  who  are  ruined  by  the  policy  it  has  pursued. 

22.  After  having  prostrated  our  national  manufactures,  lest  we  should  injure 
the  revenue,  the  revenue  itself  fails,  and  we  are  likely  to  be  obliged  to  recur 
to  loans  or  direct  taxes  to  meet  the  exigencies  of  the  Government. 

23.  Numbers  of  banks,  in  different  parts  of  the  Union,  deprived  of  their 
specie  by  the  extravagant  drains  for  Europe  and  the  East  Indies,  obliged  to 
stop  payment. 

24.  Legislatures  driven,  by  ther  prevalence  of  distress,  to  the  frightful  mea- 
sures of  suspending  the  collection  of  debts.* 

That  this  is  an  unexaggerated  picture  of  the  actual  situation  of  our  coun- 
try, is,  alas  ! too  true.  It  affords  a proof  that  our  system  has  been  radically 
unsound,  and  that  a change  is  imperiously  called  for.  Any  change  can  scarce- 
ly fail  to  be  beneficial. 

Is  this  a faithful  picture  of  unparalleled  suffering  ? Who  is  there  of  that  pe- 
riod, engaged  in  the  active  pursuits  of  industry,  who  will  not  feelingly  respond 
in  the  affirmative  ? and  to  what  source  is  it  to  be  traced  ? Consult  the  report 
of  the  Secretary  of  the  Treasury,  Mr.  Crawford,  to  the  withdrawal  of  the  cur- 
rency of  the  nation. 


The  following  Tabular  Statement  is  inserted  to  show  the  augmentation  of  ex- 
ports and  imports  of  Great  Britain,  since  the  suspension  of  specie  payments 
in  1797,  thefeby  evincing  the  increased  activity  and  energy  imparted  to 
ev^ry  class  of  industry,  by  that  important  measure  : 

Statement  of  British  exports  of  home  produce  and  manufactures  from  official  or 
fixed  Custom  House  value. 


1792, 

18  and  odd  millions  sterling. 

1805, 

25  and  odd  millions  sterling, 

1793, 

13 

do. 

1806, 

27 

do. 

1794, 

16 

do. 

1807, 

25 

do. 

1795, 

16 

do. 

1808, 

26 

do. 

1796, 

19 

do. 

1809, 

35 

do. 

1797,f 

16 

do. 

1810, 

34 

do. 

1798, 

19 

do. 

1811, 

24 

do. 

1799, 

24 

do. 

1812, 

31 

do. 

1800, 

24 

do. 

1813,  * 

1801, 

25 

do. 

1814, 

36 

do. 

1802, 

26 

do. 

1815, 

44 

do. 

1803, 

22 

do. 

1816, 

36 

do. 

1804, 

23 

do. 

I have  elsewhere  shown  how  country  banks  and  the  Bank  of  England 
increased  the  currency  to  tally  with  this  increased  quantity  of  productions. 

* Number  of  actions  for  debt,  in  1809,  5,647;  1819,  13,537. 

Number  of  judgments  confessed,  do.  3,496;  do.  10,320. 
t In  1797,  the  Bank  of  England  suspended  specie  payments. 

} lx  1813,  the  reeords  destroyed  by  tire. 


80 


The  Bank  of  England  increased  its  notes,  and  country  banks  increased  ups® 
the  basis  of  these  notes.  The  Bank  of  England,  for  a short  time,  stated 
30,000,000/.  to  have  been  out,  and  Mr.  Western,  and  other  writers,  state  that 
the  country  banks  increased  to  about  1,000 — from  this  30,000,000  must  be  de- 
ducted the  amount  of  the  notes  lying  in  the  country  banks  as  a basis  for  their 
issues. 


Extracts  from  McPherson. 

1600 — Davenport  states  that  the  gold  and  silver  in  Great  Britain  amounted 
only  to  t4, 000, 000/.  “ which  were  the  tools  she  had  to  work  with% 
when  she  first  began  to  make  a figure  in  the  commercial  world.” 

1609 — Copper  farthings  coined  to  supersede  leaden  tokens  of  tradesmen. 

1676 — Precious  metals  amount  to  6,000,000. 

1694— Bank  of  England  established. 

1697 — Silver  coin  called  in.  Notes  at  a discount.  Gave  creditors  notes  bear- 
ing 6 per  cent. 

1704 — Bank  of  England  again  obliged  to  give  notes  bearing  interest. 

1708 — An  invasion  apprehended  ; run  on  the  Bank. 

1711 — Change  of  Ministry  causes  a run  on  the  Bank. 

1714 — Run  on  the  Bank  inconsequence  of  the  Queen’s  death. 

1717 — Royal  Bank  of  Scotland  established. 

1745 — Run  on  the  Bank— the  merchants  enter  into  a resolution  to  support  its 
credit. 

1765 — Country  banks  numerous. 

1793 — Above  100  country  banks  failed. 

1797 — Bank  drained  of  money  in  consequence  of  the  war — desired  by  privy 
council  not  to  issue  cash — merchants  resolve  to  receive  bank  notes — * 
tne  Danx  puunsu  u suuciticiiL  ui  uieir  ounceriis. 


The  following  Statement  shews  the  precarious  situation  of  banking  institutions, 
which  are  obligated  to  meet  their  issues  in  specie,  the  curtailroent^which 
the  fluctuations  of  trade  will  compel  them  to  make,  and  the  distress  and 
ruin  to  the  community  which  must  be  the  fatal  and  inevitable  result.  From 
1821  to  1822,  the  specie  diminished,  as  will  be  seen,  more  than  one-fifth. 


The  seven  banks  in  Boston  had  their  specie  reduced  as  follows  : 


In  January,  1821 
In  June,  do 
In  January,  1822 
In  June,  do 


g 2,485,188 

- 2,047,907 

- “ 936,427 

406,275 


There  were  bankruptcies  in  Boston  to  the  amount  of  three  or  four  millions 
at  this  period. 


Congress  relied  upon  the  Bank  of  the  United  States  for  the  supply  of  a suf- 
ficiency of  currency  : for  Mr.  Dallas,  in  his  report,  dated  Treasury  Depart- 
ment, 6th  December,  1815,  stated,  “It  will  possess  the  means  and  opportuni- 
“ ties  of  supplying  a circulating  medium  of  equal  use  and  value  in  every  State , 
“ and  in  every  district  of  every  State , and  it  will  conciliate , aid , and  lead  the 
“ State  banks.”  This  bank  was  expected  to  be  the  grand  panacea  for  all  fis- 
cal difficulties.  But  was  it  not  easy  to  foresee  what  experience  has  proved, 
that  every  State  bank  could  not  meet  with  specie,  all  the  notes  of  the  mother 
fcank  and  branches  which  might  be  brought  at  any  crisis,  to  be  so  converted  l 


81 


Mr.  Crawford  estimated  all  the  specie  in  the  United  States*  Bank  and  branch- 
es,  and  in  State  banks,  in  1817,  at  15,500,000.  What  an  insignificant  sum  for 
a basis  to  all  the  property  of  the  nation,  and  for  all  its  transactions.  Govern- 
ments cannot  control  the  evanescence  of  specie.  Suppose  an  enemy  were 
to  send  a few  millions  sterling  of  goods  to  withdraw  specie,  should  we  not  be 
thrown  into  confusion,  and  wonder  at  our  confiding  in  an  evanescent  basis  for 
fluctuating  bank  notes  ? 

Since  the  establishment  of  our  mint,  more  than  35  years  ago,  we  have  only 
coined  in  gold,  silver,  and  copper,  to  the  amount  of  $23,650,502.  There  is 
now  of  gold  scarcely  enough  for  wedding  rings. 

For  a nation  to  be  prosperous,  there  should  be  pocket  money  in  plenty  for 
marketing  and  current  expenses,  and  large  sums  in  deposite  at  the  command 
of  individuals  to  purchase  estates  or  to  set  up  manufactures,  build  ships, 
houses,  &c.  otherwise  men  live  from  hand  to  mouth.  The  annual  accumula- 
tion of  capitals  greatly  depends  upon  a sufficiency  of  money.  Bankers  in  Eng- 
land make  fortunes  by  deposites  alone,  without  issuing  notes. 


Statement  of  the  price  of  three  per  cent,  stock  from  1790  to  1817. 


1790 

Specie. 

80 

1794 

Specie. 
- 73 

1791 

. 

- 

83 

1795 

. 

. 

65 

1792 

. 

93 

1796 

. 

. 

- 71 

1793 

- 

- 

79 

1797 

- 

- 

- 54 

The  French  war  at  first  drove  specie  to  Great  Britain,  and  the  stocks  rose. 
Afterwards,  the  British  war  drained  away  its  specie,  till  the  Bank  of  England 
suspended  specie  payments. 


Paper.  Paper. 


1798 

- 

- 

62 

leoe 

- 

- 64 

1799 

55 

1809 

- 

- 66 

1800 

62 

1810 

- 

69 

1801 

63 

1811 

- 

67 

1802 

68 

1812 

- 

- 63 

1803 

72 

1813 

- 

- 60 

1804 

56 

1814 

- 

- 64 

1805 

62 

1815 

- 

65 

1806 

61 

1816 

- 

- 61 

1807 

61 

1817 

- 

- 64 

Here  is  an  extraordinary  regularity  in  the  price  of  the  Government’s  3 per 
cents,  notwithstanding  a perilous  war,  in  which  great  reverses  and  successes 
were  experienced,  without  much  affecting  the  funds  : for  men  holding  notes 
always  wished  to  convert  them  into  stpcks  bearing  interest. 

That  the  Government  could  always  borrow  on  reasonable  terms,  is  attribut- 
able to  the  quantity  of  notes  in  circulation,  enabling  individuals  to  subscribe 
to  Government  loans.  When  we  commenced  war  with  Great  Britain,  our 
funds  soon  fell  from  10  above  par  to  20  below  par ; and  the  Government  gave 
100  of  6 per  cent,  stock,  for  80  loaned,  because  the  Government,  being  a 
great  borrower,  and  the  quantity  of  the  circulating  medium  small  in  quantity, 
its  value  rose  by  demand,  and  great  distress  ensued.  When  almost  all  the 
banks  failed,  the  community  experienced  a great  relief.  The  banks  imme- 
diately issued  more  notes ; carding  machines  and  manufacturing  establish- 
ments appeared  on  almost  every  stream  ; roads  were  subscribed  to,  and  every 
sign  of  advancement  was  exhibited,  although  our  exports  were  reduced  almost 
to  nothing ; a worse  kind  of  paper  currency,  it  is  true,  could  not  be  easily  de- 
vised— yet  it  was  better  than  none  : it  paid  our  troops,  it  purchased  materials, 
and  set  our  citizens  to  work,  and  saved  New  Orleans  by  the  exertions  of  Mr, 
Monroe,  who  borrowed  of  the  Banks  when  the  Treasury  was  exhausted.  Af- 

11 


82 


ter  this,  the  present  Bank  of  the  United  States  was”established.  The  specie 
in  its  vaults  has  undergone  great  fluctuations  : it  commenced  with  5,000,000 
of  dollars,  and  sent  Government  stocks  to  Europe -and  purchased  7,311,750  at 
an  expense  of  525,297.  These  were  once  reduced  to  less  than  500,000  in  the 
mother  bank  ; and  in  a memorial,  it  states  to  Congress,  that,  on  the  17th  Janu- 
ary, 1821,  from  the  1st  April,  1819,  its  currency  was  reduced  from  $6,045,428 
to  3,838,386  ; and  they  add,  no  evil  can  be  greater  than  a decreasing  currency 
—poverty,  beggary,  and  sloth,  follow  in  its  train. 


Extracts  from  Mr.  Thomas  Smith’s  “ Essay  on  the  Theory  of  Money  and  En- 

change.” 

Page  60 — “ Gold  and  silver  have  actually  no  value  in  use  ; although,  in  a 
**  highly  civilized  state,  they  may  have  some  value  as  articles  of  luxury,  they 
“ never  can  be  reckoned  articles  of  necessity  or  convenience.  A man  can- 
“ not  eat  gold,  drink  gold,  or  clothe  and  keep  himself  warm  with  gold  and 
“ silver.  They  must,  therefore,  have  at  all  times  been  used  merely  as  sub- 
“ stitutes  or  representatives  of  useful  articles,  which  their  formation  into  coins 
“ enabled  them  effectually  to  be. 

“ A coin  may,  therefore,  be  defined  to  be  a symbol  or  token,  issued  by  the 
“ government  of  a country  to  represent  all  commodities  according  to  a fixed 
“ proportion  of  the  standard  unit  of  that  country,  and  which  proportion  it 
“ continues  to  bear,  as  long  as  it  is  employed  as  a circulating  medium  in  that 
“ country. 

“ Gold,  silver,  and  copper,  in  bullion,  are  daily  bought  and  sold  as  articles 
“ of  commerce,  and,  cuch.  fluctuate  in  their  value  ; but,  whenever  they 
««  are  made  into  coin,  they  assume  a new  character ; as,  representing  a certain 
“ proportion  of  the  standard  unit  of  that  country,  they  become  fixed  and  in- 
“ variable  in  value. 

“ Paper  money  may  be  defined  to  be  an  obligation  for  a certain  proportion 
“ or  quantity  of  the  standard  unit  of  the  country,  granted  by  a person  or  per- 
« sons  in  whose  responsibility  the  people  of  a country  have  confidence,  which 
« obligation  passes  from  hand  to  hand  as  a symbol  or  token  of  the  standard 
“ unit,  according  to  the  proportion  expressed  therein.” 

118 — “ Depreciation  of  paper  money  can  only  take  place  when  a quantity 
beyond  the  demand  of  the  country  for  a medium,  is  issued  permanently — that 
is,  without  any  provision  being  made  for  its  being  withdrawn  again  from  circu- 
lation in  a shart  time  : forced  paper  money  alone  can  be  issued  to  deprecia- 
tion. 

“ Gold  bullion,  so  far  from  being  the  standard  of  value  in  this  country,  is 
perfectly  incapable  of  being  so — being  merely  an  article  of  commerce,  and,  as 
such,  subject  to  frequent  fluctuations  in  its  comparative  value. 

“ That  the  gold  and  silver  coins  issued  by  Government  only  pass  as  repre- 
sentatives of  commodities  according  to  the  established  standard  of  value  m the 
country. 

“ That  when  these  coins  are  carried  out  of  the  country  they  are  issued  in, 
they  cease  to  be  representatives  of  standard,  and  become  bullion,  liable  to  all 
fluctuations  of  value  incident  thereto. 

“ That  the  daily  changes  of  property  in  the  country  are  now  so  immense, 
that  it  would  be  perfectly  impossible  to  effect  them  with  gold  and  silver  coia 
alone,  and,  therefore,  a paper  circulating  medium  is  become  essentially  ne- 
•essary. 

“ That,  to  oblige  the  bank  to  be  ready  at  all  times  to  give  guineas  in  ex. 
change  for  their  notes,  is  doing  away  the  very  intention  and  purpose  fbr  which 
the  bank  was  established,  and  running  the  risk  of  depriving  the  country  of  the 
convenience  thereof. 


83 


<*  A Committee  of  the  House  of  Commons  might,  with  more  propriety, 
have  inquired  into  the  high  price  of  Campeachy  logwood  and  Cuba  fustic, 
these  two  valuable  articles  having  risen  from  15  to  150,  than  into  the  high 
price  of  bullion  : for  the  want  of  the  former  might  cause  much  inconvenience 
to  our  manufactures  ; whereas,  were  all  the  gold  and  silver  bullion  exported, 
nay,  were  all  the  gold  and  silver  in  the  country  annihilated,  the  country  might 
continue  to  flourish  without  them.” 

225,  30 — “ What  is  money  ? It  is  an  article  to  which  a people  of  a country 
have  been  pleased  to  affix  a value,  in  order  to  employ  it  in  simplifying  and  fa- 
cilitating their  mutual  intercourse. 

“Ina  country  where  public  confidence  and  credit  abound,  paper  money  is 
found  of  the  most  essential  benefit. 

“ The  commercial  intercourse  carried  on  in  Great  Britain  is  now  so  great 
and  extended,  and  the  daily  exchange  of  property  so  vast,  that  it  would 
be  impossible  for  it  to  be  effected  with  the  assistance  of  gold  coin  alone, 
without  the  intervention  of  paper  in  all  large  payments.  This  has  already 
been  pointed  out  and  proved. 

“ Although  gold  coin  may  be,  and  is,  advantageously  employed  in  the 
lesser  interchanges  of  society,  yet  even  there,  it  is  subject  to  an  inconve- 
nience from  which  paper  is  free — that  is,  the  being  liable,  whenever  a balance 
of  foreign  payments  runs  against  the  country,  to  be  carried  off  to  assist  in  pay- 
ing that  balance.” 

231 — “ Gold  is  an  article  not  produced  within  the  country,  so  that,  before  it 
can  be  employed  as  a medium,  real  property,  of  some  sort,  must  be  exported 
to  be  given  for  it.” 


Mr.  Crawford  states  that  the  specie,  during  the  war,  was  reduced  more  than 
44  per  cent.  If  it  amnnntpfl  thf»n  +r»  /-.nly  aVinnt  1 5,000,000,  r>ujyht  wc  not  to 
have  foreseen  that  the  banks  would  have  been  obliged  to  suspend  specie  pay- 
ments? The  following  is  an  extract  from  his  report : 

“ The  evils  which  have  resulted  to  the  community  from  that  suspension 
««  have  been  great ; but  it  may  well  be  doubted  whether  others  of  equal  mag- 
“ nitude  would  not  have  been  suffered,  if  that  event  had  not  occurred.  The 
“ extent  to  which  the  currency  must  have  been  reduced,  in  order  to  have 
«*  avoided  the  suspension,  could  not  have  failed,  at  any  period,  to  cause  great 
“ embarrassment  and  distress  to  the  community.  But,  in  a time  of  war,  when 
the  country  was  invaded  ; when  the  public  safety  required  that  the  energies  of 
**  the  nation  should  be  fully  developed,  a sudden  and  extensive  reduction  of 
**  the  currency,  by  any  cause  whatever,  would  have  been  fatal.  Under  such 
“ circumstances,  the  demand  for  currency  would  have  been  too  imperious  to 
« be  resisted.  It  would,  from  necessity,  have  been  supplied  by  the  issue  of 
“ Treasury  notes.”  Again:  “In  all  great  exigencies,  which,  in  the  course 
“ of  human  events,  may  be  expected  to  arise  in  every  nation,  the  suspension  of 
“ payment  by  banks,  where  the  circulation  consists  principally  of  bank  notes, 
“ is  one  of  the  evils  which  ought  to  be  considered  as  the  inevitable  consequence 
“ of  their  establishment .” 

The  sentiments  of  this  able  statesman  and  financier  have  completely  corro- 
borated my  own.  When  the  banks  were  ordered  to  resume  specie  payments, 
he  foresaw  the  evils  which  would  result  from  the  sudden  diminution  of  bank 
notes,  and  recommended  to  the  Bank  of  the  United  States  an  issue  from  the 
Treasury  of  Government  notes  not  bearing  interest,  which  he  said  would  be 
equal  to  gold  and  silver , and  his  opinion  is,  I am  sure,  unaltered.  It  is  only  to 
be  regretted  that  he  sacrified  so  much  to  delicac}'.  If  the  present  Secretary 
be  applied  to  on  this  subject,  I have  no  apprehension  of  an  unfavorable  opinion. 

If  Congress,  at  the  commencement  of  the  last  war,  had  issued  national  notes 
not  bearing  interest,  previous  to  their  advertisement  for  loans,  they  might  have 


84 


borrowed  at  five  per  cent,  as  the  British  did  ; and  if  the  sum  borrowed  had 
been  50,000,000,  the  account,  at  the  end  of  ten  years,  would  have  stood  as 
follows : 

Principal,  - 50,000,000 

Interest,  5 per  cent,  for  ten  years,  ...  - 25,000,000 


75,000,000 

But,  by  the  mode  adopted,  of  giving  100  six  per  cent,  stock  for 
80  in  notes,  the  principal  of  50,000,000  amounted  to  - 62,500,000 

And  interest  at  six  per  cent,  for  ten  years,  to  - - 37,500,000 


100,000,000 


Thus  there  was  a loss  of  twenty-five  millions  of  dollars,  and  a depreciation  of 
credit. 

I have  not  adverted  to  the  saving  of  interest  which  would  have  been  gained 
by  the  first  issue  of  national  notes,  nor  to  the  great  loss  Government  sustained 
by  receiving  District  and  State  Bank  notes,  which  were  at  a great  discount  be- 
yond the  sphere  of  their  credit.  It  may  be  urged  that  Treasury  notes  bearing 
S\  per  cent,  interest,  were  at  a discount,  and,  therefore,  those  not  bearing 
interest  would  have  been  still  more  depreciated.  The  reason  why  the 
former  were  depreciated  is  obvious  : contractors  and  others  offered  these 
Treasury  notes  in  large  sums,  and  they  therefore  became  saleable 
circulands,  and  not  a currency.  It  was  in  vain  to  say  to  a bank,  “ you 
**  have  suspended  specie  payments,  and  these  Treasury  notes  are  intrinsically 
"more  valuable  than  your  notes.”  Their  reply  was,  “ as  long  as  Congress 
" chooses  to  depreciate  their  own  credit,  and  to  exalt  ours  by  giving  125  six 
“ per  cent,  stocks  for  100  of  our  notes,  you  must  also  sell  Treasury  notes  at  a 
tf  similar  ratio.  We  must  avail  ourselves  of  this  preference.” 

ShOUlU  Congrcoo  in.vootigfn4-o  tKIe  Impoi+anl-  Bllhjort  upon  wHich  I have  ath 

dressed  you,  gentlemen,  they  will  shudder  at  the  dangers  and  evils  incident  tu> 
a specie  basis. 


85 


ADDRESS  OF  MR.  THOMAS  LAW, 

Jit  a meeting  held  at  the  City  Hall,  Washington,  on  the  second 
Jlpril,  1824,  on  the  subject  of  a National  Currency . 


Gentlemen  . You  have  been  invited  here,  not  to  consider  our  situation  par- 
ticularly, for,  perhaps,  we  suffer  less  by  scarcity  of  money  than  any  other  com- 
munity  on  this  side  the  Susquehannah.  Indeed,  a stranger,  on  witnessing  our 
gaiety,  said,  ‘ ‘ Non  equidem  invideo — miror  magis.”  Our  having  winter  plays 
for  the  first  time  our  lectures  on  astronomy,  elocution,  and  mineralogy  ; our 
exhibitions  of  paintings,  our  crowded  streets,  and  our  new  houses,  evince  that 
our  city  is  rising.  This,  indeed,  is  the  inevitable  consequence  of  its  being  the 
metropolis  of  the  nation  : for  it  must  bear  a proportion  to  the  nation’s  popula- 
tion, as  the  axle  of  a wheel  must  bear  a proportion  to  its  circumference.  But* 
having  {received  unwelcome  tidings  from  almost  every  quarter,  and  we  our- 
selves being  sufferers,  we  felt  it  our  duty  to  propose  a consideration  of  the  subject, 
and  hope  to  have  the  co-operation  of  the  best  informed  to  prepare  a memorial 
to  Congress.  We  were  also  induced  to  take  this  step  on  witnessing  a zeal  for 
internal  improvements,  and  remarkable  abilities,  in  this  first  Congress  after  the 
new  census.  Rut  why  apologize  ? Unfortunately,  finance  is  not  an  every  day 
topic  of  conversation ; nor  is  political  economy,  as  it  ought  to  be,  a branch  of 
science,  taught  in  our  universities.  Nor  has  any  one  the  advantage  which  our 
citizens  possess,  of  having  access  to  a very  copious  library.  It  is  for  you  to 
decide,  after  receiving  the  information  we  have  to  communicate,  whether  we 
have  occasioned  you  useless  trouble.  A memorial  is  the  best  mode  whereby 
we  can  claim  the  attention  of  Congress  to  finance,  which  is  by  many  deemed 
an  intricate  subject,  and  has  been  denominated  a modern  Eleusinian  mystery. 
Moreover,  the  old  adage,  what  is  every  body’s  business  is  nobody’s,  has  alrea- 
dy been  too  long  experienced.  More  than  one  member  of  the  House  of  Re- 
presentatives has  given  notice  of  an  intended  motion  to  recommend  the  pecu- 
niary embarrassments  of  the  nation  to  the  notice  of  Congress  ; but  diffidence, 
dissuasion,  or  the  urgency  of  some  other  business,  have  caused  a postpone- 
ment. Longer  postponement  threatens  evil  consequences,  and  will  retard  the 
accomplishment  of  the  Potomac  Canal — an  object  which  Washington,  the 
Father  of  our  Country,  suggested  and  patronized,  and  mentioned  in  his  will  : 

“ Feeling  the  ruling  passion  strong  in  death.” 

I will  now  proceed,  and  briefly  submit  to  you  my  propositions.  If  prefera- 
ble ones  are  given,  I shall  rejoice,  and  the  meeting  of  this  day  will  be  immor- 
talized. Perhaps  a brief  sketch  of  the  influence  of  money  on  society,  may 
not  be  uninteresting.  Money  first  gave  a motive  to  economize  ; for,  as  money 
represents  all  other  kinds  of  riches,  to  amass  money  is  to  possess  the  means  of 
obtaining  every  thing.  Interest  for  the  use  of  money,  was  introduced  with 
money,  and  this  has  been  another  motive  to  accumulate  loans  in  grain,  &c.; 
before,  the  introduction  of  money  could  not  effect  the  purposes  of  money, 
and  thus,  men  of  genius  and  of  enterprise  were  useless,  who  now  by  loans, 
create  capitals,  and  employ  the  industrious.  Mechanic  arts  were,  of  course, 
in  the  most  languid  state  ; and  commerce  was,  literally,  nothing.  Civilization, 
therefore,  chiefly  arose  from  money.  Credit,  in  modern  times,  greatly  sup- 
plies the  place  of  capitals ; and  paper,  that  of  specie.  As  property  and  pro- 


86 


Auctions  increase  more  and  more,  money  is  wanted.  As  money  iacreases,  im- 
provements of  all  kinds,  and  productions  of  every  description,  are  increased  ; 
and  low  interest,  the  soul  of  commerce,  is  produced.  The  mines  of  America 
have  caused  the  rapid  advancement  of  Europe.  Even  the  consumption  of  the 
precious  metals  is  so  increased  by  the  use  of  plate,  watches,  gilding,  &c.  that 
the  supply  ought  to  be  constantly  augmented  in  civilized  nations.  Mr.  Storch, 
an  able  Russian  author,  who  has  published  six  volumes  on  political  economy, 
in  his  chapter  on  money,  terms  it  the  marvellous  instrument,  to  which  we,  in 
a great  measure,  owe  our  wealth  and  civilization. 

The  insufficiency  of  the  quantity  of  specie  produced  from  the  mines  to  sup- 
ply our  wants,  having  been  experienced  by  all  nations,  they  have  introduced 
substitutes  for  the  precious  metals ; but  as  despotism  could  not  have  public 
confidence,  the  paper  issued  was  accompanied  with  coercion,  and  consequent- 
ly with  depreciation.  Great  Britain,  the  only  free  nation  in  Europe,  with  a re- 
presentative Government,  has  shewn  what  paper  money  can  perform.  She 
has  given  an  experiment  of  infinite  importance  to  mankind. 

When  our  States  were  colonies,  the  governments  of  the  states  were  con- 
stantly having  recourse  to  paper  money,  and  they  were  always  complaining, 
that  the  king,  by  prohibiting  it,  counteracted  their  advancement. 

Franklin,  in  his  own  memoirs,  gives  decided  arguments  from  his  own  ex- 
perience, in  favor  of  money  ; it  is  an  interesting  part  of  his  biography,  and 
will,  I hope,  be  noticed  by  our  printers.  I will  now  confine  your  attention  to 
measures  of  a very  late  date.  The  following  is  an  extract  from  Mr.  Madison’s 
message  : “ It  may  become  necessary,  to  ascertain  the  terms  on  which  the 
notes  of  the  Government  (no  longer  required  as  an  instrument  of  credit) 
shall  be  issued  upon  motives  of  general  policy,  as  a common  medium  of  cir- 
culation.” 

In  consequence  of  this,  a committee  was  appointed  ; the  chairman  was  a 
man  of  pre-eminent  abilities,  and  I cannot  assign  a reason,  why  the  committee 
never  made  a report,  but  that  the  bank  of  the  United  States  was  expected  to 

be  a panacea  for  all  poonnioiy  pmKavi'o co mentis 

When  the  Committee  was  appointed  to  deliberate  about  an  uniform  national 
currency,  I stated,  that  they  had  a question  to  investigate,  of  more  importance, 
than  any  one  which  had  been  discussed  since  the  formation  of  the  Constitu- 
tion. 

At  that  time,  I used  my  feeble  efforts,  and  uttered  my  Cassandrian  predic- 
tions. Mr.  Crawford  has  said,  that  “the  ardor  ol  enterprise  has  been  check- 
ed, and  the  productive  energies  of  the  nation  seriously  affected  * and  that 
there  is  no  recorded  example  in  the  history  of  nations,  of  a reduction  of  the 
currency  so  rapid  and  so  extensive,  and  that  but  few  examples  have  occurred 
of  distress  so  general  and  severe.”  Have  we  recovered  from  our  distresses 
since  his  report  ? Look  at  Mr.  Adams’s  statement  of  our  manufactures ; it  is  an 
omnium  gatherum  enumeration  of  every  trifling  article,  and  yet  the  whole 
amount  is  only  $32,000,000  ; in  Great  Britain  it  is  tenfold  : yet  there  are  not 
more  hands  there,  applicable  to  labor.  Look  at  the  Secretary  of  the  Treasu- 
ry’s unwelcome  statement  of  the  amount  of  stocks  held  abroad.  Mr.  Mathew 
Carey  estimates  all  our  debts,  to  amount  to  $ 55, 000,000  : calculate  only  the 
annual  interest  on  this.  The  United  States’  Bank  sent  to  Europe  our  Govern- 
ment’s 6 per  cent,  stocks,  and  purchased  gold  and  silver  to  the  amount  of 
$7,311,750,  at  an  expense  of  $525,297.  Where  are  they?  gone  back  again 
beyond  the  flood. 

Our  population  has  increased  ; does  this  fluctuating,  evanescent,  hie  et  ubi- 
quae  article,  specie,  increase  amongst  us?  It  is  called  a basis  for  bank  notes,  by 
Bullionists;  one  would  think  that  some  profound  statesman,  knowing  the  evils 
it  would  produce,  had  thus  nicknamed  it  in  ridicule.  Even  now,  in  the  nine- 
teenth century,  bank  notes,  founded  on  this  melting  disappearing  basis,  are 
called  a solid  substantial  currency  so  do  men  in  the  fever,  called  a calenture, 
plunge  into  the  ocean,  deeming  it  a green  field.  I will  now  briefly  shew  ths 
fallacy  of  our  expectations  to  have  a sufficiency  of  specie. 


Our  population  will  increase,  in  23  years,  ten  millions,  and,  if  only  three  dol- 
lars per  head  be  requisite,  we  must  import  the  amount  of  30,000,000 

There  is,  in  every  country,  an  annual  loss  of  specie,  and  a con- 
stant consumption  by  melting,  and  also  a conversion  of  it  into 
plate,  gilding,  &c.  Baron  Humboldt  estimates  this,  in  France,  at 
7,273,756  of  roubles  per  ann.  I will  suppose  our  consumption 
only  to  be  $2,000,000 ; we  must  therefore  import,  in  23  years,  to 
keep  up  our  stock,  ......  46,000,000 

If  we  send  to  China,  Bengal,  &c.  (which  is  a most  moderate 
calculation,)  only  four  millions  annually,  we  ought  to  import, 
in  23  years  ......  92,000,000 

Here  is  a sum  of  $ 168,000,000 
which,  divided  by  twenty-three,  amounts  to  seven  millions,  to  be  annually  im- 
ported, by  a favorable  balance  of  trade,  over  and  above  our  increased  demand 
for  consumable  articles.  Can  we  expect  this  ? Is  there  any  reason  to  justify 
the  slightest  hope  ? By  the  Secretary  of  the  Treasury’s  report,  the  balance 
of  trade  is  against  us,  and  our  exports  of  specie  exceed  our  imports,  and  I 
have  shown  what  debts  we  have  to  pay.  A spirit  is  excited  to  make  public 
improvements,  and  we  have  meetings,  and  speeches,  and  memorials,  and  sur- 
veys, and  maps,  but  where  is  the  sine  qua  non  ? I will  not  dwell  on  this  mor- 
tifying subject,  nor  will  I arouse  your  sympathies  by  a detail  of  miseries,  the 
contemplation  of  which  has  shattered  my  nerves.  I will  rush  to  an  elucidation 
of  the  remedy,  and  prove  that  we  may  prosper. 

It  is  the  enviable  happy  lot  of  the  citizens  of  the  United  States,  that  despot- 
ism cannot  perpetuate  error,  or  suppress  truth ; consequently,  when  expe- 
rience teaches  or  wisdom  inculcates  an  improvement,  we  will  adopt  it  to  pro- 
mote prosperity,  to  strengthen  our  independence,  and  to  cement  the  Union. 

It  is  also  our  pleasure  to  know,  that  genius,  knowledge,  and  patriotism,  are 
collected  annually  fiv>m  <*u  ^uaaws  or  me  uniuu,  in  mis  city,  to  further  the 
general  interest,  and  to  encourage  every  exertion  for  the  public  welfare.  We 
may  therefore  have  perfect  confidence  in  finding  a favorable  reception  for  any 
proposition  that  has  this  for  its  object. 

That  every  one  may  have  a clear  comprehension  of  the  system  proposed,  l 
will  explain  its  mode  of  formation,  and  its  operation,  from  beginning  to  end. 
First,  the  Congress,  with  the  usual  sanction  of  the  President,  may  appoint  a 
board  to  make  national  notes.  The  number  of  the  members  of  which  this 
board  is  to  be  composed,  the  kind  of  paper,  and  the  stamping,  &c.  for  the 
notes,  are  matters  of  detail,  not  to  be  dwelt  upon  here.  I,  however,  will 
merely  mention,  that  forgery  can  be  prevented.  The  purport  of  the  note 
will  be,  that  it  is  receivable  for  five  or  ten  dollars  and  upwards,  (whatever  the 
denomination  of  the  note  may  be,)  in  all  payments  to  Government  for  duties, 
taxes,  debts,  lands,  &c.  and  that  stock  bearing  four  per  cent,  is  deposited  in 
the  hands  of  the  board,  to  the  full  amount  of  the  notes  issued,  which  any  hold- 
er of  the  notes  may  receive,  at  any  time,  in  exchange  for  notes,  and  that  the 
interest  of  the  stocks  is  to  be  paid  in  specie,  if  required.  Congress  is  to  pass 
a law  that  the  board  must  never  issue  any  notes,  without  the  deposite  of  an 
equal  amount  in  four  per  cent,  stocks,  and  in  consequence  of  orders  from 
Congress. 

If  Congress  chooses  to  take  shares  in  canals,  to  lend  to  States,  or  to  give 
stocks  to  them,  or  to  make  national  canals  or  roads,  or  to  lend  or  to  sell  notes 
to  banks,  these  accounts  of  issues  and  of  profits  must  be  kept  separately. 

The  board  is  annually  to  report  to  Congress,  for  publication,  to  give  confi- 
dence to  their  fellow-citizens,  the  amount  of  notes  issued  by  this  and  that  or- 
der, and  the  amount  of  stocks  received  to  correspond  with  the  same,  and  the 
amount  of  notes  returned  and  remaining  in  circulation. 

The  question  is,  will  these  notes,  so  receivable,  be  current  at  par  ? I ask, 
what  gives  currency  to  a dollar,  but  the  receipt  of  it  by  Government  ? Adam 
5mith  has  truly  said,  that,  if  a sovereign  issued  paper  money,  and  insisted 


88 


upon  being  paid  his  revenue  in  these  notes,  if  they  were  not  in  plenty,  those 
having  to  pay  would  be  obliged  to  give  a premium  in  gold  and  silver  to  obtain 
them.  If  there  should  be  any  doubt  about  this.  Congress  may  authorize  its 
land  offices  to  receive  them  at  101  for  100.  This,  however,  is  totally  unne- 
cessary. That  this  increase  of  money  would  augment  the  sales  and  raise  the 
value  of  land,  is  self-evident,  and  the  great  objection  is,  that  this  drain  of  the 
national  money  will  be  apt  to  occasion  a scarcity,  unless  Congress,  by  salutary 
appropriations,  occasions  an  efflux  equal  to  the  influx,  to  diffuse  again  this  vi- 
vifying circulation.  The  nation  has  four  hundred  millions  of  acres  of  land,  and 
our  population  increases  rapidly.  Now,  the  increase  amounts  to  300,000  per 
annum,  and  will  soon  be  500,000,  and  will  proceed  in  a compound  ratio.  Sup- 
pose half  the  500,000  settle  on  national  lands,  and  that,  computing  five  to  a 
family,  every  fifth  man,  or  fifty  thousand  families,  purchase  100  acres  each,  the 
sums  received,  at  the  average  of  a dollar  and  a half,  will  amount  to  $7,500,000. 
At  first,  of  course,  the  receipts  will  be  much  less  ; but  you  must  all  admit  that, 
as  Government  gives  the  capability,  or  wherewithal  to  purchase,  the  sales 
must  naturally  increase.  When  purchases  of  public  land  were  allowed  on 
credit,  the  purchasers  ran  in  debt  20,000,000,  and  the  Government  agreed  to 
take  back  the  lands  on  the  simple  true  statement  of  the  purchasers,  that  there 
was  not  money  in  the  country  to  pay  for  them.  Ex  nihilo  nihil  fit,  is  an  old 
Roman  axiom,  which  all  might  have  foreseen  would  be  exemplified  at  the  land 
offices.  Mississippi  stock,  although  receivable  only  for  Mississippi  land,  and 
not  in  payment  of  revenue,  was  at  98  ; bank  notes,  in  Great  Britain,  were  re- 
ceived at  par,  and  continued  so,  during  a perilous,  expensive  war.  I cannot, 
therefore,  doubt,  that  these  national  notes  would  be,  (to  use  the  Secretary  of 
the  Treasury’s  words,)  equal  to  gold  and  silver. 

But,  say  bullionists,  these  notes  will  not  be  received  like  gold  and  silver 
abroad  ; and  in  that,  I reply,  consists  the  great  superiority  of  them  for  a home 
circulating  medium.  Congress  may  issue  the  requisite  quantity  to  stimulate 
industry  and  to  lower  the  rate  of  interest  to  five  per  cent.  Here  I would 
quote  the  words  of  Mr.  Grey — but  I wm  nave  ms  valuable  chapter  on  paper 
money  printed  separately — the  continuance  of  this  national  money  at  home 
will  prevent  variableness  and  scarcity.  Those  who  have  property  will  be 
enabled  to  sell  it  for  its  value  ; men  of  enterprise  or  of  ingenuity  will  be  able 
to  borrow  ; bonds  and  mortgages  will  again  be  received  ; parents  will  obtain 
the  means  to  portion  out  their  sons  and  daughters  ; suits  will  diminish  ; and 
lenders  will  be  sorry  to  be  paid — for,  when  legal  interest  is  six  per  cent,  and 
market  interest  is  five,  lenders  are  glad  to  continue  bonds  on  the  punctual 
payment  of  legal  interest.  Again,  I say,  that  the  non-receivableness  of  our 
national  currency  abroad  is  the  great  desideratum  to  prevent  fluctuation  in  va- 
lue, and  all  the  miseries  which  our  most  useful  citizens  now  suffer.  This  is 
the  consummation  devoutly  to  be  wished.  But,  to  attack  me  on  the  other 
side,  the  bullionist  exclaims.  Congress  will  issue  to  excess,  and  the  national 
notes  will  depreciate.  I answer,  that  this  is  an  impossibility ; whilst  they  pay 
the  interest  of  their  stock,  the  board  will  state  annually  the  quantity  in  circu- 
lation, and  the  rate  of  interest — and  only  when  it  falls  to  four  per  cent,  will 
the  notes  be  exchanged  for  stock  : so  that  Congress  may  stop  issues  to  pre- 
vent applications  for  stock.  It  is  self-evident  the  notes  cannot  exceed  the 
demand  for  them,  because  all  excess  will  be  changed  into  stock.  If  stocks  be 
taken.  Government  must  tax  to  pay  the  interest,  and  Congress  will  not  adopt 
taxation,  at  which  they  shudder,  and  which  is  so  unpopular ; they,  therefore, 
will  stop  issuing  before  the  notes  fall  so  low.  At  any  rate,  this  permission  of 
the  note  holder  to  convert  his  notes  into  stock,  will  prevent  superfluity. 

I deem  this  a mathematical,  incontrovertible  demonstration,  that  there  can- 
not be  an  excess  of  notes.  It  were  needless  to  explain  here,  that  notes  or 
money  every  man  desires  to  get  rid  of  for  something  more  valuable ; but 
stocks  are  locked  up.  To  illustrate  my  position  by  occular  demonstration, 
as  it  were  : Imagine,  gentlemen,  a long  large  tube,  with  an  orifice  about  the 
centre,  or  half  way.  If  I pour  a liquid  into  this  tube,  will  not  the  liquid  rise 


89 


till  it  flows  out  at  the  orifice  ? and  is  it  possible  for  me  to  make  the  liquid  rise 
higher,  and  up  to  the  top,  and  to  overflow  the  brim  ? In  like  manner,  is  it  not 
equally  impossible  to  make  notes  fall  below  four  per  cent,  if  the  owners  can 
convert  them  into  four  per  cent,  stock?  The  notes  issued  by  the  Govern- 
ment from  the  board  will  thus  be  returned  to  them,  to  be  locked  up  as  ex- 
cessive, until,  when  restored  to  the  board,  an  increasing  demand  causes  their 
being  re-issued  to  supply  the  wants  of  a people  increasing  in  numbers  and  in 
capitals,  and  requiring  a proportional  augmentation  of  the  circulating  me- 
dium. I am  anxious  to  be  clearly  understood  on  this  simple  point  : for,  by 
this  mode,  it  is  evident  to  me,  there  may  be  always  a sufficiency,  without  the 
possibility  of  a superfluity  of  any  consequence,  and,  consequently,  an  invaria- 
ble standard  of  value  may  be  obtained  to  prevent  the  embarrassments  and  de- 
preciations of  property,  to  which  a young  country  is  exposed  by  the  fluctua- 
tions in  the  quantity  of  gold  and  silver.  All  allow  that  the  banks  must  sus- 
pend specie  payments  in  war.  Is  not  peace,  then,  the  time  to  try  a safe  ex- 
periment to  prevent  this  evil  ? 

Had  I the  option  of  having  20,000,000  of  specie  dollars  to  be  showered  from 
the  clouds,  or  the  same  amount  to  be  issued  from  the  board,  from  order  of 
Congress,  I should  prefer  the  latter,  because  they  would  not,  like  an  influx 
of  specie,  cause  the  commencement  of  profitable  undertakings,  and  then  dis- 
appear, and  produce  distress.  The  quantity  of  money  required  is  very  tri- 
vial, compared  with  the  amount  of  circulands.  The  Bank  of  England  could 
never  keep  out  more  than  thirty  millions  to  about  ten  thousand  millions  of  cir- 
culands. Our  property,  belonging  to  individuals,  has  been  estimated  at  half 
this  sum.  The  Government  might,  gradually,  with  great  benefit,  throw  into 
circulation  as  many  dollars  as  the  Bank  of  England  did  pounds  sterling.  But, 
to  proceed  with  the  probable  objections  to  the  national  notes. 

A third  man  will  rise  and  say  that  a national  currency  will  have  an  unfavora- 
ble effect  on  exchange  with  other  nations.  This  is  impossible.  It  may,  how- 
ever, cause  a favorable  exchange,  by  augmenting  our  exports,  in  consequence 
of  increased  m^K;n  and  inrliictrv-  WTptv*.  Atrain.  I must  flip  lumi- 

nous author.  Grey,  who  is  most  satisfactory  on  this  head.  Great  Britain,  by 
paper  money,  increased  her  exports  from  £23,000,000  sterling,  in  1797,  to 
£44,000,000  sterling,  in  1815.  Thus  it  took  a century  to  produce  a given 
amount,  which  ''was  nearly  doubled  in  18  years  by  paper  money.  Amongst 
articles  received  in  return,  such  as  raw  materials,  the  precious  metals  also 
came  annually,  till  they  became  superfluous,  and  only  fit  to  lend  to  foreign 
nations,  to  make  them  tributary.  Hear  the  words  of  Lord  Castlereagh  : 

“ A war  for  existence  was  then  pending  ; the  3 per  cents,  had  fallen  from 
««  98  to  48,  and  all  the  property  of  the  nation  had  declined  in  the  same  pro- 
“ portion,  so  that  individuals  possessing  property,  in  1793,  worth  20,000,000 
“dollars,  had  their  fortunes  reduced,  in  1797,  more  than  one  half.  The  na- 
“ tion  found  immediate  relief  from  this  measure .”  Mr.  Percival,  the  Chancel- 
lor of  the  Exchequer,  afterwards  said,  ‘ It  is  equally  consolatory  and  flatter- 
“ ing  to  the  English  nation,  and  not  less  true,  that  we  have  overcome  those 
“ alarming  dangers  which  the  predictions  of  certain  persons  announced  in 
« 1797,  on  account  of  suspension  of  payment  in  specie.  The  nation  has  ob- 
“ tained,  since  1797,  a greater  degree  of  internal  prosperity  and  external 
“ force,  than  at  any  preceding  period.’  Lord  Castlereagh,  subsequently  to 
this,  observed,  * In  this  war,  whilst  our  exertions  by  land  and  sea  have,  in 
“ extent,  surpassed  all  former  efforts,  the  country  has  risen  in  manufactures, 
“ internal  improvement,  revenue,  and  commerce,  with  a velocity  which  has 
“ never  been  experienced  in  a period  of  profound  peace.  In  the  American 
‘‘war,  its  inevitable  termination  might  be  calculated  from  the  decline  of  our 
“resources  ; in  this  war,  we  feel  that  our  resources  are  augmenting,  and  that 
“there  is  no  necessary  limit  to  our  exertions,  in  point  of  time,  so  long  as  the 
4 ‘ injustice  of  the  enemy  shall  leave  us  no  other  rational  choice  but  perse ve- 
“ ranee  i*  the  contest.  What  is  this  owing  to  ? Principally  to  the  Bank  being 
“ able  to  doits  duty  by  the  country,  instead  of  ruinously  (I  mean  as  far  as  con- 
12 


90 


**  cerns  the  ;nterests  of  the  public,)  at  every  moment  of  temporary  pressure 
“ or  alarm  contracting  its  issues,  to  protect  the  establishment  itself  from  being 
“ drained  of  gold  ; they  are  enabled  to  support  public  credit  with  a steady 
“ hand|;  the  productive  labor  of  the  country,  which  is  its  true  and  only  wealth* 
**  is  not  only  kept  up,  but  enabled  to  extend  itself ; the  taxes  are  collected 
“ with  facility,  the  loans  are  raised  on  moderate  terms,  and  the  whole  machine 
“ proceeds  without  betraying  a symptom  of  decline.” 

Why  do  her  manufactures  exceed  ours  ten  fold,  but  because  she  has  more 
of  the  primum  mobile  ? 

A fourth  person  will  hazard  an  opinion,  that  the  Banks  will  be  adverse  to 
the  National  circulating  medium.  This,  I reply,  they  cannot  be,  if  they  have 
common  sense  ; and,  I add,  that  they,  on  the  contrary,  unanimously  desire  it  * 
for  they  know  the  National  circulating  medium  will  not  evanesce  to  be  melted* 
or  hoarded,  or  carried  abroad.  'No.  A voyage  to  China,  or  an  unfavorable 
balance  of  trade,  cannot  affect  them  ; their  profit  is  in  keeping  notes  out,  and 
they  lament,  as  stockholders  and  as  individuals,  the  necessity  to  curtail — to  re- 
duce the  number  of  notes  out — to  prosecute,  and  to  sell  property  for  half  its 
value  ; which  depreciation  is  created  by  their  reducing  the  quantum  of  cur- 
rency  in  consequence  of  a little  specie  being  exported,  whereby  the  means  of 
purchasing  are  of  course  reduced. 

The  Patriotic  Bank,  which  I established  as  an  experiment,  set  an  example 
which  ought  to  have  been  of  service.  Its  capital  was  250,000  dollars,  and  the 
whole  was  subscribed  in  Government  6 per  cent,  stock.  This  Bank  would 
not  falsely  promise  to  pay  in  specie,  but  it  bound  itself  to  redeem  its  notes  with 
stock,  at  the  price  of  the  day.  It  discounted  at  5 per  cent.  Its  capital  gave 
6 per  cent.,  on  $ 250,000,  ....  $ 15,000 

And  interest  at  5 per  cent,  on  the  same  sum  discounted,  was  12,500 


So  it  received  11  per  cent.,  or  - - $ 20,500 

The  i-^»"  >iroKf>  nf  /»rmrsf*  tn  he  deducted.  ( will  not  here 

show  how  it  has  been  necessitated  to  sell  its  stock,  and  recall  its  notes,  out, 
since  the  order  to  pay  in  specie,  but  I will  mention  one  fact  to  corroborate  my 
reasoning  : Not  one  person  applied  for  an  exchange  of  notes  for  stocks — they 
all  knew  the  basis  of  our  notes  were  Government  stocks,  and  the  basis  of  the 
Government  stocks  was  the  property  of  the  nation,  amounting  to  5,000,000,000 
dollars,  and  which  would  soon  double.  Excuse  this  allusion  to  a particular 
case  : it  was  so  apropos  I could  not  reject  it. 

Lastly,  some  person  who  avoids  the  trouble  of  thinking,  will  say,  “ I ob- 
ject to  a National  circulating  medium,  because  I remember  Continental  money, 
and  have  heard  of  French  assignats.  Such  a man  resembles  the  one  who  can- 
not read,  and  who,  seing  a poem,  a history,  an  account,  a bond,  a will,  a novel, 
or  a treatise  on  finance,  should  call  all  the  leaves  assignats,  because  written  on 
paper.  If  there  be  blunderheads,  who  cannot  make  a distinction  between  co- 
ercive and  voluntary,  revolutionary  force  and  regular  government,  it  were 
waste  of  time  to  reason  with  them.  The  man  who  is  under  the  icfluence  of 
hydrophobia,  startles  alike  at  wine  or  water.  And  thus  he  who  will  not,  or 
cannot,  discriminate  between  a National  note  now,  and  a Continental  one 
then,  I cannot  argue  with,  and  I can  almost  envy  him  his  exemption  from 
thought. 

“ For  oft  unhappy  is  the  man,  whose  mind 
“ Leads  him  to  think  and  act  beyond  mankind.” 

It  may  be  asked,  why  the  Government  stocks,  which  are  to  be  deposited, 
are  not  to  bear  an  interest  of  5 per  cent.  ? The  answer  is,  that  interest  is  so 
low  in  Great  Britain,  that,  with  national  notes,  received  for  goods,  the  mer- 
chants, by  exchanging  them  for  stocks,  would  take  away  5 per  cent,  stock, 
and  thus  occasion  an  augmentation  of  our  foreign  debt,  already  too  large. 
Now,  they  will  not  take  away  4 per  cents.,  purchased  at  par,  because  there 
must  be  commission  and  expenses  deducted  from  the  4 per  cent. 

It  may  be  asked.  How  will  this  National  circulating  medium  be  thrown  into 
circulation  ? 


91 


It  is  a pleasing  and  a new  embarrassment  to  be  at  a loss  to  appropriate  sur- 
plus funds. 

I answer — Let  the  Government  make  canals  and  roads,  and  lend  to  each 
State,  at  2^  percent.,  or  give  to  each  State  a certain  sum,  according  to  its  popu- 
lation or  extent  of  territory.  Let  Congress,  also,  subscribe  to  canals  and  roads, 
See.  undertaken  by  companies,  to  obtain  an  income,  without  taxation.  Con- 
gress will  readily  discover,  in  its  wisdom,  the  best  means  of  employing  this  su- 
perfluity. 

That  all  these  objects  may  be  judiciously  pursued,  there  ought  to  be  a Home 
Department  formed,  to  receive  applications  ; to  collect  and  arrange  materials, 
and  to  prepare  reports  for  Congress.  This  Home  Department  is  our  great 
want.  Without  it,  there  must  be  imperfect  information,  with  regard  to  inter- 
nal improvements.  When  a Home  Department  shall  be  formed,  our  views 
will  expand,  our  improvements  will  be  systematised,  and  a career  will  be  open- 
ed for  public  advancement  which  few  have  contemplated. 

The  plan  I have  proposed  is  a novelty.  So  was  the  planetary  system  ; and 
Galileo  was  imprisoned  for  asserting  that  the  earth  circumvolved.  The  circu- 
lation of  the  blood  I may  call  a modern  discovery,  by  Harvey. 

The  introduction  of  steam  engines,  and  their  application  to  boats,  and  Ark- 
wright’s machinery,  are  of  our  days ; the  Constitution  of  which  we  boast,  and 
which  unites,  already,  twenty-four  States,  by  a General  Government,  like  so 
many  planets  revolving  round  the  Sun,  is  the  invention  of  our  fathers — shall 
their  descendants  make  no  improvements  in  the  mechanism  of  society  ? Great 
Britain,  it  is  said,  has  resumed  specie  payments,  but  the  Bank,  after  it  repre- 
sented itself  ready  to  do  so,  was  long  prohibited  by  judicious  statesmen  ; and 
it  is  now  ordered  in  a qualified  manner,  when  specie  is  not  wanted,  and  paper 
is  preferred  to  it.  Were  we  in  a similar  predicament,  we  should  not  now  be 
assembled.  There  is  no  analogy  between  the  two  cases. 

Mr.  Grey,  after  expatiating  upon  the  instantaneous  enriching  influence  of 
paper  money,  and  after  corroborating  his  reasoning  with  numerous  exhilarating 
facts,  concludes  : Our  Government,  our  Legislature,  and  merchants,  should 
rise  above  thejprejudices  of  poor  and  unenlightened  times,  despise  the  declama- 
tions of  the  ignorant  or  ill-designing,  and  examine  facts  for  themselves.  Britain 
has  long  led  the  way,  in  all  the  improvements  of  commerce  ; they  ought  to 
make  her  lead  the  way  in  this  important  one,  and  show  other  nations  that  she 
first  knew  the  true  nature  of  home  money , and  first  adopted  measures  that  na- 
turally spring  from  such  a knowledge  ; she  will  no  longer  clog  her  commercial 
transactions  by  a connexion  between  paper  and  metal  money,  which  can  only 
tend  to  counteract  the  enriching  and  improving  effects  of  the  former,  but 
leave  it  to  be  regulated,  as  it  ought  to  be,  entirely  by  the  demand.  The  re- 
striction (of  specie  payments)  prevents  this  impoverishing  connexion  ; it 
©ught,  therefore,  to  be  continued,  and  not  as  a temporary  regulation,  extend 
from  time  to  time,  unless,  perhaps,  to  enforce  what,  however,  does  not  seem 
to  be  wanted,  an  attention  to  prudence.  The  regulating  power  of  the  demand 
is,  indeed,  sufficient ; and,  in  order  to  promote  the  issue  of  paper  money,  to 
the  full  amount  of  the  home  exchanging  circuland,  exclusive  of  that  called 
change,  it  ought  to  be  left  to  the  National  Banks  to  sell  gold  by  weight,  for 
their  notes,  only  when  it  suited  their  conveniency.  This  should  be  a standing 
law,  in  money,  with  us,  as  long  as  we  are  a nation.” 

Can  there  be  more  decisive,  emphatic  expressions  ? I wish  every  member 
of  Congress  had  extracts  from  this  luminous  author,  ©n  the  happiness  of  na- 
tions, laid  on  his  table.  Were  patriotic  individuals  to  subscribe  only  25  cents 
each,  the  chapter  on  paper  money  could  be  printed  for  general  perusal. 

I rejoice  that  I entertained  the  opinions  of  Mr.  Grey,  long  before  I perused 
his  valuable  work  ; nor  shall  I ever  regret  my  exertions,  for  several  years,  to 
call  the  attention  of  the  public  to  this  important  subject. 

Our  exportation  of  Government  stocks,  of  United  States*  Bank  stock,  of 
State  stocks,  of  Bank  stocks,  and  of  specie,  and  the  low  state  of  our  manufac- 
tures, the  depreciation  of  property,  and  our  inability  to  make  improvements, 
all  proclaim  that  our  financial  measures  are  injurieus.  Wc  have  relied  upon 


02 


the  precious  metals  for  several  years,  and  our  expectations  have  been  disap- 
pointed. Shall  we  not  make  an  experiment  of  another  medium  ? In  the  de- 
cline of  life,  I make  this  last  effort  for  the  benefit  of  the  United  States,  and  by 
the  example  which  it  will  afford  of  prosperity  and  happiness  for  the  benefit  of 
every  nation. 

If  we  have  any  latent  enemies  abroad,  which  I hope  we  have  not,  and 
which  I am  sure  we  ought  not  to  have,  the  development  of  our  vast,  and  al- 
most inexhaustible  resources,  will  make  them  hesitate  about  entering  into 
hostilities  with  us,  and  thus,  according  to  the  President’s  excellent  message, 
we  shall  prevent  war  by  being  provided  for  it ; and  this,  to  all  the  enlightened 
and  philanthropic  freemen,  whose  feelings  are  in  unison  with  ours,  will  be  a 
source  of  heart-felt  consolation. 

Were  I not  awfully  impressed  with  the  conviction  that  our  prosperity,  nay, 
I must  add,  our  Union,  depends  upon  a cementing  paper  currency,  to  bind  us 
by  public  improvements,  and  by  prosperous  employments,  and  by  the  com- 
mand of  adequate  resources,  I would  not  have  solicited  your  attention  ; nor 
would  I thus  expose  myself  to  criticism,  if  I believed  that  my  reasoning  were 
refutable.  Discussion  will  elicit  light,  and  the  crisis  is  most  favorable  ; I will 
not  say  that  I was  unprepared,  but  I regret  that  I had  only  two  or  three  days 
to  collect  these  suggestions ; that  they  may  be  deemed  useful,  is  my  great  de- 
sire, not  for  myself,  but  for  these  United  States.  On  the  first  introduction  of 
the  system,  I would  limit  the  amount  of  the  national  currency  to  twelve  or 
fifteen  millions ; there  were  19,700.000  treasury  notes  in  circulation  during 
the  war.  Time  will  soon  put  to  the  test  the  fallacy  or  correctness  of  the  sys- 
tem ; and,  in  proportion  as  the  benefits  derived  from  it  are  felt,  further  issues 
maybe  made.  In  the  first  instance,  it  is  of  importance  that  the  experiment — 
(but  why  should  I call  it  an  experiment  ? since  it  has  been  confirmed  by  ex- 
perience,) should  be  limited  to  a small  sum,  lest  the  apprehensions  of  the  timid 
should  be  violently  excited  by  too  bold  a commencement.  The  sum  I have 
proposed,  being  a^uai  to  tbo  fvfnbnKia  pop'datinn  nf  tbs  TTniff'd  states  at  the 
present  time,  gives  one  dollar  a head  for  each  person,  and  renders  it  easy  to 
make  a distribution  of  the  sum  among  the  States,  upon  the  equitable  principle 
of  their  respective  numbers. 

In  addition  to  this  general  apportionment  among  the  States,  I would  recom- 
mend that  loans  should  be  made  to  Road  and  Canal  Companies,  and  particu- 
larly to  the  Potomac  Canal  Company,  as  the  early  accomplishment  of  this 
connecting  line  of  communication  between  the  East  and  West,  is  not  so  much 
of  local  as  of  national  importance. 

I cannot  say  with  precision  what  amount  of  national  currency  will  ultimately 
be  found  necessary  for  the  necessities  of  the  community,  nor  what  quantity  of 
specie  is  required  for  a given  population.  In  Great  Britain,  to  a population  of 
about  15,000,000,  there  were,  in  1793,  about  twenty  millions,  and  in  France, 
according  to  Mr.  Neckar,  from  accurate  data,  2,200,000,000  of  livres,  or  407 
millions  of  dollars,  to  a population  of  25  millions.  This  would  give  16  dollars 
per  head.  But,  as  the  operations  of  industry,  in  an  advancing  state  of  society, 
become  more  active,  substitutes  for  specie  are  introduced  from  necessity  by 
society  itself,  without  the  intervention  of  Government,  in  the  shape  of  bonds, 
bills  of  exchange,  checks  on  banks,  &c.  The  addition  thus  made  to  the  cur- 
rency of  the  nation,  admits  of  no  precise  calculation. 

If  the  tariff  now  under  discussion  before  Congress  should  be  established,  an 
augmentation  of  money  will  be  still  more  requisite.  Baron  Storch  states,  that 
the  accession  of  Russia  to  the  continental  system  maintained  by  France,  and 
the  prohibition  to  import  manufactures,  by  forcing  the  Russians  to  manufac- 
ture for  their  own  consumption,  caused  speculations  in  a quantity  of  new  en- 
terprises, whereby  the  interest  of  money  was  made  to  rise  : for  the  capitals 
which  were  before  employed  in  old  enterprises  were  drawn  to  the  new. 

The  same  writer  shews  that,  by  lowering  the  rate  of  interest  from  5 to  4 per 
cent,  a borrower  can  raise  1,250  for  trade  as  a capital  for  the  same  interest 
which  he  before  paid  for  the  loan  of  1,000,  and  thus  his  business  can  be  in- 


V 


93 


creased  one-fifth.  He  also  makes  the  following  judicious  observations  : “As 
interest  falls,  productions  are  amplified,  and  a number  of  enterprises  are  suc- 
cessively undertaken,  which  one  would  scarcely  think  of.  Thanks  to  low  in- 
terest, agriculture  is  encouraged,  and  manufactures  employ  greater  capitals, 
and  commerce  opens  new  branches,  from  which  it  was  before  excluded  by 
high  interests ; and  thus  the  industrious  gain  employ  by  a government  mea- 
sure, although  not  by  expenditures  for  which  they  would  otherwise  be  taxed.” 
Tie  illustrates  this  by  stating  that,  in  Russia,  where  the  interest  of  money  is  8 
per  cent,  if  a Russian  only  gains,  by  a trade,  5 per  cent,  he  must  leave  it  off, 
whilst,  in  Holland,  where  interest  is  3 per  cent,  the  Dutchman  would  be  a 
gainer  of  2 per  cent. 

If  we  had  a sufficiency  of  money  capital,  thousands  and  tens  of  thousands, 
now  idle,  or  only  temporarily  employed,  would  be  augmenting  productions  by 
constant  work,  and  the  compound  ratio  with  which  capitals  would  increase  by 
an  economical  people,  would  surprise  the  world. 

This  national  currency  will  be  preferable  to  gold  and  silver  in  all  cases 
where  payments  or  purchases  are  to  be  made  by  a person  residing  at  a dis- 
tance from  another.  Suppose,  for  instance,  A,  at  New  York,  wants  to  pur- 
chase sugar  at  New  Orleans ; by  sending  this  national  currency  to  B,  it  soon 
comes  to  hand  at  the  latter  place,  with  only  a little  expense  of  postage  ; where- 
as A would  otherwise  be  obliged  to  employ  a carriage  or  a vessel,  and  there- 
by lose  time  and  incur  expense.  Merchants  will  derive  great  advantages  from 
this.  The  Government  also  may,  by  this  national  currency,  greatly  aid  the 
operations  of  the  United  States’  Bank  by  facilitating  distant  disbursements. 

A small  diminution  in  the  quantity  of  the  circulating  medium  of  a nation  has 
a great  effect  on  the  price  of  estates,  houses,  and  fixed  property,  because,  if 

100.000. 000  be  sufficient  for  the  interchange  of  5,000,000,000  of  circulands, 
a diminution  of  10,000,000  will  reduce  the  value  of  the  latter  more  than  a 
tenth  : for,  as  Lord  Lauderdale  has  well  observed,  a small  scarcity  makes  a 
great  rise  in  price,  and  vice  versa,  when  Great  Britain  had  exported  about 

25.000. 000  in  specie,  the  circulands  in  the  nation,  estimated  to  be  worth 
about  §10,000,000  in  1793,  were  reduced  to  half  their  value  in  1797.  Thus, 
we  find  complaints  amongst  ourselves  of  depreciation  of  value  ; and  in  an  es- 
timate from  the  Senate  of  Pennsylvania,  we  find  that  real  estates,  assessed  in 
1815  at  316,633,889,  were  depreciated  one-third  in  two  or  three  years  by  a 
reduction  of  the  circulating  medium.  Can  there  be  a stronger  proof  of  the 
importance  of  our  subject  ? 

Although  I fear  that  I have  too  long  trespassed  on  your  patience,  I cannot 
forbear  recapitulating,  before  I conclude,  all  the  advantages  which  will  flow 
to  the  nation  from  the  adoption  of  this  or  a similar  measure.  Property  of 
every  kind  will  rise  in  value.  Industry,  now  drooping,  will  be  revived  and 
stimulated.  Manufactories  will  be  established.  Canals  and  Roads  will  be 
constructed.  Our  stocks  will  rise  to  a par  equality  with  those  of  England, 
whose  3 per  cents,  are  now  93,  and  ours  are  but  75.  Exchange  will  thus  be 
improved.  From  the  ready  reception  of  national  notes  in  the  transaction  of 
business,  banks  will  not  fear  demands  for  specie  ; will  consequently  cease  cur- 
tailing, and  thus  credit  will  become  extended.  By  the  ample  resources  which 
it  will  afford  to  the  Government,  it  will  cease  to  be  influenced  by  the  fear  of 
appropriating  money  for  national  objects  of  improvement.  In  short,  our  po- 
pulation, almost  equal  to  that  of  Great  Britain,  will  present  the  same  scene  of 
wealth  and  power  which  she  now  exhibits,  and  which  is  attributable  to  the 
successful  operation  of  the  system  which  is  now  recommended. 

Can  I,  then,  suppose  that  Congress  will  treat  with  indifference  our  memo- 
rial, and  neglect  the  opportunity  of  entering  upon  the  investigation  of  a sub- 
ject of  such  vital  importance  ! It  is  true  that  the  Session  is  now  drawing  to 
a close,  hut  the  principle  of  the  system  is  simple,  and  its  details  far  from 
intricate.  A short  week’s  attention  to  it  would  be  sufficient  to  produce  a con- 
viction of  its  correctness,  and  afford  time  enough  to  mature  the  best  means  for 
its  establishment.  It  does  not,  as  in  the  case  of  the  tariff,  which  has  occupied 


94 


s®  much  time,  require  a minuteness  of  inquiry,  and  a reconciliation  of  conflict- 
ing interests.  We  may,  therefore,  confidently  hope  that  the  first  session  of 
the  18th  Congress  will  be  associated  in  the  minds  of  every  one  with  the  hap- 
piness and  glory  of  the  nation,  by  the  establishment  of  a National  Currency. 


The  following  is  the  Memorial  of  the  Committee. 

To  the  Honorable  the  Senate  and  House  of  Representatives  of  the  United  States , 
in  Congress  assembled. 

The  undersigned,  a committee  appointed  in  behalf  of  sundry  citizens  of  the 
United  States,  assembled  at  Washington,  most  respectfully  represent : 

That  it  is  the  enviable  lot  of  the  citizens  of  the  United  States  to  live  under  a 
Constitution  which  allows  to  all  the  free  expression  of  their  opinions  upon 
every  subject  of  national  interest.  When  no  despotism  interferes  to  suppress 
truth,  error  can  never  be  perpetuated.  When,  therefore,  experience  has 
taught,  or  reason  points  out,  any  improvements  in  the  great  science  of  legisla- 
tion, by  which  our  prosperity  may  be  promoted,  our  independence  strength- 
ened, and  our  union  more  firmly  cemented,  we  look  with  confidence  to  its 
adoption  by  a liberal  and  enlightened  Government. 

It  has  been  generally  admitted,  that,  since  the  peace  in  Europe,  the  United 
States  have  not  advanced  in  wealth  and  prosperity,  with  a rapidity  in  any  de- 
gree proportioned  to  the  vast  advantages  which  they  enjoy  in  soil,  climate, 
population,  and  laws.  Your  memorialists  respectfully  suggest  their  belief  that 
the  cause  of  this  slow  progress  is  to  be  found  in  the  undue  proportion  which 
the  property  of  the  nation  bears  to  the  amount  of  its  circulating  medium,  or 
money  ; and  in  tne  sudden  diminuduu  oftke  amount  of  that  circulating  medium. 

It  is  one  of  the  first  principles  of  political  economy,  that  the  prosperity  of 
a nation  depends  upon  preserving  a just  equilibrium  between  the  whole  of  its 
property  and  the  medium  by  which  that  value  is  exchanged.  Whenever  this 
is  suffered  to  fall  below  its  due  proportion  of  the  whole  property  of  the  nation, 
in  the  same  degree  is  its  industry  checked,  are  its  public  improvements  aban- 
doned,  and  its  prosperity  suffered  to  decline;  and  the  evil  is  infinitely  aggra- 
vated if,  from  any  cause,  the  sum  of  money-capital  with  which  a nation  has  been 
accustomed  to  operate,  be  materially  diminished. 

Upon  a full  investigation  of  this  important  subject,  your  memorialists  have 
been  brought  to  the  conviction  that  this  requisite  equilibrium  can  never  sub- 
sist in  any  nation,  for  any  certain  period,  while  gold  and  silver,  or  any  other 
article  of  trade  and  commerce,  are  used  as  the  sole  materials  of  money.  The 
quantity  of  the  circulating  medium,  or  money,  of  any  nation,  which  is  formed  of 
such  material,  must  always  depend  upon  the  demand  for  that  material  by  other 
nations.  No  nation,  therefore,  can  be  properly  said  to  be  independent,  so  long 
as  it  uses  a circulating  medium,  or  instrument  of  exchange,  which,  at  any 
time,  may  be  withdrawn  from  it  at  the  will  and  caprice  of  a foreign  nation,  or 
by  the  complex  and  irresistible  operations  of  trade.  Your  memorialists,  there- 
fore, regard  it  as  no  less  essential  to  the  permanent  independence  than  the  con- 
tinued prosperity  of  a nation,  that  its  money  should  be  so  constituted  as  to  afford 
no  inducement  to  the  commercial  cupidity  of  other  nations  ; that  it  should  be, 
in  other  words,  a home  money,  confined  to  home  circulation.  The  establish- 
ment of  this  sort  of  money,  adapted  to  the  purposes  of  home  circulation,  upon 
an  undoubted  basis  of  credit,  in  addition  to  the  more  diffusive  and  permanent 
effects  it  would  produce  upon  the  happiness  and  prosperity  of  the  nation, 
would  immediately  relieve  the  specie-paying  banks  from  the  pressure  that 
cramps  their  operations,  and  would  enable  them,  in  some  degree,  to  fulfil  the 
original  object  of  their  institution.  This  beneficial  result  was  expressly  con- 
templated in  the  letter  of  the  Secretary  of  the  Treasury  to  the  Bank  of  the 


United  States  ; whose  recommendation  we  are  happy  to  be  able  to  cite,  among 
other  encouraging  instances  of  the  approbation  of  the  system  on  the  part  of  il- 
lustrious and  practical  statesmen. 

Mr.  Madison,  conscious  that  some  circulating  medium  was  requisite  to  stimu- 
late industry,  as  water  is  required  to  cause  the  wheels  of  machinery  to  circum- 
volve,  recommended,  in  his  message  to  Congress,  the  consideration  whether  a 
paper  currency,  founded  on  national  faith,  might  not  be  successfully  introduced. 
A committee  for  this  purpose  was  accordingly  appointed.  The  Secretary  of 
the  Treasury,  about  the  same  time,  in  the  letter  above  alluded  to,  urged 
the  necessity  of  issuing  a national  currency  to  prevent  the  evils  which  he  truly 
anticipated  would  low  from  too  sudden  a reduction  of  specie  payments,  and, 
in  cogent  arguments,  proved  that  the  national  currency  would  possess  all  the 
credit  and  value  of  gold  and  silver.  In  a subsequent  report,  after  the  resump- 
tion of  specie  payments  had  begun  to  produce  the  deplorable  effects  which  the 
Secretary  of  the  Treasury  had  predicted,  he  remarked  that  the  nation  was  suf- 
fering under  great  distress  ; that  the  reduction  of  the  currency  had  checked 
the  ardor  of  enterprize  and  paralyzed  the  energies  of  the  nation. 

Notwithstanding  this  high  and  united  official  recommendation,  no  remedial 
measures  were,  in  consequence,  adopted,  although  the  pecuniary  embarrass- 
ments of  the  nation  have  been  increasing  from  year  to  year,  to  a degree  that 
leaves  no  hope  of  relief,  if  the  present  specie-based  paper  system  be  perse- 
vered in. 

In  this  painful  and  desponding  predicament,  a numerous  and  respectable 
meeting  of  our  fellow-citizens  have  appointed  the  undersigned  a committee  to 
solicit  the  attention  of  your  honorable  bodies  to  the  pecuniary  embarrassments 
of  the  nation  at  large,  and  to  suggest  for  your  consideration  the  expediency 
and  necessity  of  introducing  a home  money  in  aid  of  specie,  on  a more  truly 
solid  basis,  which  will  be  less  liable  to  fluctuation,  and  constitute  the  nearest 
approximation  to  the  great  national  desideratum;  a permanent,  invariable  stand- 
ard of  value,  not  capable  of  being  affected  by  the  balance  of  trade. 

Being  impressed  with  tKc  oonwiion  tw  il;»  object  Is  attainable, 

the  undersigned  have  been  instructed  to  present  this  memorial  to  the  enlight- 
ened Representatives  of  the  nation,  with  a full  confidence  that  an  expanded 
view  will  be  taken  of  this  important  branch  of  political  economy,  and  that  the 
investigation  will  lead  to  the  exhibition  of  a successful  experiment,  which  wilt 
fiirnish  a beneficial  example  to  all  nations,  and,  by  prosperity,  form  an  impor- 
tant era  in  the  history  of  their  own  country. 

All  which  is  respectfully  submitted. 

THOMAS  LAW,  ) 

WALTER  JONES,  >Committte. 
ELIAS  B.  CALDWELL,  3 

Note.— Mr.  Watterston  and  Van  Zandt’s  accurate  tables  shew,  that  the  value  of  the  gold  de- 
posited at  the  Mint,  from  1818  to  1827,  inclusive,  amounted  to  g 2,403,186;  value  of  silver 
coin,  jg  10,797,268. 


This  memorial  was  referred  to  a committee,  bft  no  report  was  made.  So 
much  apathy  almost  produces  despondency,  but  humanity  and  philanthropy 
have  enforced  from  me  the  last  effort.  “ My  heart  still  dictates,  and  my  hand 
obeys.” 


Note. — In  the  National  Intelligencer  of  this  day,  November  18,  the  follow- 
ing is  the  statement  of  forty-seven  Banks  in  Rhode  Island  : 


Capitals, 

Deposits,  - 
Notes  in  circulation, 

Debts  due  to  the  Banks, 

Stocks  and  Notes  of  the  Banks, 
Real  Estate,  - 
Specie, 


6,151,912 

1,000,595 

887.642 
7,508,993 

422,306 

227,551 

357.642 


I hope  there  is  an  error  in  this  report,  for  the  average  of  «•«•*»  x>~' 


UNIVERSITY  OF  ILLINOIS 


